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it has exploded after Steve MNUCHIN's comments.
So what might happen now? In his comments, Mr. Mnuchin nodded to a crucial issue regarding Fannie and Freddie: safety and soundness. “We’ll make sure that when they’re restructured, they’re absolutely safe and they don’t get taken over again,” he said, “But we got to get them out of government control.”
A first step in ensuring that Fannie and Freddie are safe would be to let them rebuild their capital. Since the government began taking all their profits in 2012, it has directed the companies to operate on a small and shrinking sliver of capital. Under the current arrangement, the companies will have zero capital at the end of 2018.
This is clearly untenable and unsafe for taxpayers, who would again be on the hook if Fannie and Freddie began losing money.
An easy way to let them rebuild capital would be to end the quarterly transfer of all their profits to the Treasury. This would not require legislation; it could be done administratively with incoming Treasury officials advising the Federal Housing Finance Agency, which regulates Fannie and Freddie, to change the terms of the government’s agreement with the companies. This was supposed to happen anyway while the companies were operating under the conservatorship.
http://www.nytimes.com/2016/12/02/business/trump-treasury-may-mean-independence-for-fannie-and-freddie.html?smid=tw-share&_r=1
So why did Mr. Mnuchin’s comments jazz the markets? Because they revealed a seismic shift in the way these companies are viewed by the new administration. In place of the strident, anti-G.S.E. ideology that has dominated the conversation on both the left and the right since the bailout, it looks as if a more pragmatic and positive approach to the companies and their role in the mortgage market is on the way.
What that means, in my view, is that the enterprises may be allowed to live a new day rather than continue to be diminished and drained of their profits.
http://www.nytimes.com/2016/12/02/business/trump-treasury-may-mean-independence-for-fannie-and-freddie.html?smid=tw-share&_r=1
Trump Treasury May Mean Independence for Fannie and Freddie
Steven Mnuchin, President-elect Donald J. Trump’s nominee to run the Treasury Department, electrified Fannie Mae and Freddie Macshareholders on Wednesday when he signaled that the mortgage finance giants would finally be allowed to get out from under Washington’s thumb.
“We got to get Fannie and Freddie out of government ownership,” he told Fox Business. “It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.”
Mr. Mnuchin is right. It has been more than eight years since the federal government took over Fannie and Freddie in the mortgage crisis; as such, they are the last big piece of unfinished business from that era
http://www.nytimes.com/2016/12/02/business/trump-treasury-may-mean-independence-for-fannie-and-freddie.html?smid=tw-share&_r=1
Bill Ackman has made close to $400 million on Fannie and Freddie
Ackman, who’s called this an “illegal act,” has been in the process of suing the government, claiming the net-worth sweep violates the Fifth Amendment by taking private property for public use without just compensation.
http://finance.yahoo.com/news/bill-ackman-has-made-close-to-400-million-on-fannie-and-freddie-152842382.html
Weekend Blitz: FNMA Stock, FMCC Stock, Alibaba Stock, RAD Stock, & GM Stock
The best way to play FNMA stock and FMCC stock
We are big fans of Federal National Mortgage Association (OTCMKTS:FNMA) and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC), or more commonly known as Fannie Mae and Freddie Mac.
In fact, FNMA stock is part of the BNL Portfolio. I added FNMA stock earlier in 2016, at $1.75 and $2.35, and have held through thick and thin. With gains over 100%, our approach with FNMA stock and FMCC stock has been to own some, but not enough to really hurt the portfolio.
With that said, there is a lot of speculation and optimism surrounding FNMA stock and FMCC stock right now. Many believe GSE reform is coming. We believe it’s likely, and if so, FNMA stock and FMCC stock may very well head to $20/share. While it may seem like an easy buy, there’s much more to the story
https://bnlfinance.com/2016/12/03/weekend-blitz-fnma-stock-fmcc-stock-alibaba-stock-rad-stock-gm-stock/
Ackman Scores Big November on Fannie, Freddie Gains
William Ackman sliced in half his losses for the year after a strong November at Pershing Square Capital Management LP.
Mr. Ackman’s flagship private fund rose 9.6% in November and its international fund rose 9.8%, according to people familiar with the matter. Mr. Ackman’s flagship fund is still down 10.1% in 2016, the people said, on top of losses in 2015, largely due to Valeant Pharmaceuticals International’s sharp decline.
Pershing Square Holdings, Mr. Ackman’s Amsterdam-listed fund, is down 13.5% for the year, up from a 22.5% decline through October. The public fund uses more leverage than the flagship fund.
November’s biggest gains came from a $500 million windfall, on paper, in Fannie Mae and Freddie Mac, which soared after Donald Trump’s election as investors bet that the new administration will restore the government-controlled mortgage-finance companies to their shareholders. Restaurant Brands International Inc. andChipotle Mexican Grill, two of the hedge fund’s biggest investments, also rose.
http://blogs.wsj.com/moneybeat/2016/12/02/ackman-scores-big-november-on-fannie-freddie-gains/
I learned this from fairholm's conference call on November 18. The plaintiff lawyer was there to give the briefing to the investors.
as of November 18, there were 308 cases has been heard and out of all 308, 304 cases has been settled and opinion released. also on November 29 two more opinion were released. So we basically are 2 cases away. Very likely it will come today.
Appeals for the D.C. Circuit--- plaintiff need to win only one of the 6 arguments.
1. Breach of good faith – No one would give them $33B they raised in offerings if they could just send money to affiliated entity.
2.Breach of contract -Right to liquidation Preference And Dividend Stops on Common And they Are still doing it. Tres is paying itself dividends
3.Breach of fiduciary – self dealing for no consideration – its classic breach
4.Treasury exceeded authority for proceeding new securities after 2009 when net sweep happened in 2012
5.Treasury imposed net sweep and HERA prevents that
6.fhfa acted as a genunine conservator? main argument for the plaintif.
out of all these 6 plaintiff need to win only one of them and then the stock price spike
http://finance.yahoo.com/news/sallie-mae-went-private-fannie-161053603.html
How Sallie Mae Went Private, And How Fannie Mae And Freddie Mac Could Do The Same
Mnuchin didn’t provide details about the game plan for Fannie and Freddie, but some analysts have speculated that the Trump administration intends to allow the two government-sponsored enterprises (GSE) retain their profits and enter the private market. That could put Fannie and Freddie on the same path that student lender SML Corp(NASDAQ: SLM) took.
Trump’s treasury pick gives hedgies 12 billion reasons to smile
Hedgies invested in Fannie Mae and Freddie Mac unwrapped an early $12 billion
That’s how much value was added to the mortgage giants’ shares after Trump’s treasury secretary-designee, Steven Mnuchin, said one of his priorities was to “get Fannie and Freddie out of government ownership.”
“It makes no sense that these are owned by the government and have been controlled by the government for as long as they have,” the 53-year-old former Goldman Sachs partner told Fox Business Network.
Investors took Mnuchin’s comments to mean the Treasury Department would stop collecting the profits of the two companies — as it has since taxpayers came through with a $187.5 billion bailout in 2008.
Hedge fund moguls have been pressing that point for years.
http://nypost.com/2016/12/01/trumps-treasury-pick-gives-hedgies-12b-reasons-to-smile/
Treasury Nominee Mnuchin Promising on Volcker Rule and Fannie and Freddie
Mnuchin is correct that Fannie Mae and Freddie Mac have been in the government-run conservatorship for too long and should be released into the private sector. Yet this release must be done in a way that both respects Fannie and Freddie shareholder rights and gets rid of any explicit or implicit government backing of the two entities
https://cei.org/blog/treasury-nominee-mnuchin-promising-volcker-rule-and-fannie-and-freddie
GSE Common Once Deemed Worthless, Now Has a ‘Market Cap’ of $43.15 Billion
Based on current trading values, Fannie common now has a market capitalization rate (share price multiplied by number of shares) of $28.01 billion. Freddie common is valued at $15.14 billion.
http://www.insidemortgagefinance.com/imfnews/1_994/daily/fannie-mae-freddie-mac-shares-soar-in-value-1000039222-1.html
Treasury Secretary Steve Mnuchin Confirms New ParadigmIn a few sentences on Fox Business News newly announced Treasury Secretary Steve Mnuchin confirmed what until now had been backroom whispers and innuendos.He turned the eight-year logjam on GSE reform upside down.
If you have not seen this please take a moment now and see for yourself if you have seen it watch it again, this is the single biggest development in our cause to date. Start at 04:55. “We’ve got to get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have.” – Steven Mnuchin
http://video.foxbusiness.com/v/5229369696001/?#sp=show-clips
Because there have already been serious discussions about the GSE issue within Team Trump Mnuchin was well prepared for the question. As I said earlier, there are members including John Paulson on the team who are deeply knowledgeable and quickly separate facts from the false hype. The fact that Mnuchin stated that they would get this done quickly also confirms that the wheels are already in motion to bring about the end of both the sweep and conservatorship of Fannie and Freddie. Essentially Steve confirmed the main points we had heard coming out of Trump’s camp when he said that by having the government boot on Fannie and Freddie’s necks has greatly hampered the housing recovery. It has kept out private capital and forced millions of home buyers onto the sidelines.
https://timhoward717.com/2016/12/01/treasury-secretary-steve-mnuchin-rocks-the-world-declares-fannie-and-freddie-will-be-freed/
Ignore The Enemies In The Press
We tried to convey the lead up to this game changing event as best I could. It was a challenge because of the sometimes contradiction intel coming at us. We also did not want to risk derailing it by feeding the false narrative being whipped up in the media.The fact is that up until a few days ago no one knew for sure if Mnuchin would even get the nod. Jeb Hensarling was regularly floated as being with Mnuchin as the top two potential nominees. Yesterday our vague and fuzzy hopes became crystal clear reality; Mnuchin did what we have been hoping President Obama would do for eight years.He confirmed weeks of speculation and guesses.
I have much more to share and will be posting more soon as well as jumping into the comments section as I am able. Folks, please do not focus on our opponents in the media who had kicked us when we were down and tried to plant seeds of doubt whenever our faith was being restored. We achieved heights yesterday in this struggle that our opponents can only dream of. In many ways it is over, we won, it’s just a matter of how the details play out from here.I am not suggesting that we should lay down our arms and go home. We must remain vigilant, ready and fight until the end. It is much easier though now with the wind at our backs. THE PARAGRAPH BEFORE LAST
https://timhoward717.com/2016/12/01/treasury-secretary-steve-mnuchin-rocks-the-world-declares-fannie-and-freddie-will-be-freed/
Edit 10:42 Am 12/1/16 Hensarling Hype Is False
The hype surrounding Jeb Hensarling is nonsense,it is a dishonest and desperate attempt by our enemies to try and shake our faith. Jeb Hensarling totally backed off his kill GSE rhetoric in an attempt to win Trump’s favor. I shared this in the post the day before last; “Jeb Hensarling in an attempt to be viewed more favorably by Trump has diluted his radical views even acknowledging that his fully privatized housing finance agenda stands no chance of passing in the Senate. He also stated that the political will does not exist for a fully privatized system because of the carnage it would unleash on the housing market.”
Trump and Mnuchin are running the show now, and they can quickly free Fannie and Freddie without any Congressional involvement. That is the Truth folks, but you may not find it in the media.----LAST PARAGRAPH
https://timhoward717.com/2016/12/01/treasury-secretary-steve-mnuchin-rocks-the-world-declares-fannie-and-freddie-will-be-freed/
Carl Icahn Joins Bill Ackman In Bet On Fannie And Freddie
Carl Icahn appears to have joined the hedge fund party that is trying to make a fortune off of the resuscitation of mortgage giants Fannie Mae and Freddie Mac, the government sponsored enterprises that were bailed out during the financial crisis and placed into conservatorship.
Icahn took a $50 million position in Fannie Mae and Feddie Mac in March by buying common stock from Bruce Berkowitz’s Fairholme Funds. Icahn bought 6.8 million shares of Fannie Mae for $4.03 per share and 5.7 million shares of Freddie Mac for $4.04 per share, according to a court document that was reported by The Wall Street Journal and CNBC. Berkowtiz, who bet early and big on Fannie and Freddie, not only gets to book a nice gain on the shares he sold to Icahn, but he potentially also gets an ally in his effort to make outsized gains from his continued large position in both the common and preferred shares of the GSEs
http://www.forbes.com/sites/nathanvardi/2014/06/03/carl-icahn-joins-bill-ackman-in-bet-on-fannie-and-freddie/#7f623b93326b
Frannie investors liking makeup of Trump team
• Picked to lead the domestic transition team, Ken Blackwell two years ago called the arrangement with Treasury "theft of private property."
• John Paulson has reportedly been tapped as an advisor, and he's known to be a fan of releasing government sponsored enterprises from their shackles.
• Former Goldmanite Steven Mnuchin was Trump's campaign finance chief and apparently on the short list for Treasury Secretary. While he's not been explicit about his views on Frannie, he does serve on the Sears board with Fairholme's Bruce Berkowitz and is seen as likely sympathetic to shareholder interests.
• Bill Ackman: "I think Fannie and Freddie are going to get resolved within the first 12 months of this new administration, and I’m looking forward to having my second meeting with Donald Trump and negotiating a deal."
http://www.investing.com/news/stock-market-news/frannie-investors-liking-makeup-of-trump-team-440043
Over the past few years, Paulson and other hedge fund investors have deployed an intense lobbying and public relations campaign in Washington over a variety of issues that would benefit their bottom line. This included heavy lobbying to make sure debts Puerto Rico owed to their hedge funds were first in line for full repayment and getting the federal government to release Fannie and Freddie.
Joining Paulson on the Trump transition team is another supporter of his favored Fannie and Freddie policy: former Ohio Secretary of State Kenneth Blackwell. The far-right politician was tapped to lead Trump’s domestic policy transition team. In 2014, while working for a nonprofit founded by investors in Fannie and Freddie stock, he penned many op-eds calling for the hedge fund-backed policy of recapitalization and release
Trump has routinely sided with the hedge fund campaigns throughout the campaign. The Republican Party platform enacted at the Republican National Convention in Cleveland included support for the recapitalization and release of Fannie and Freddie. He also endorsed the hedge fund campaign to pressure Puerto Rico to pay back debts to them first.
His election victory is already paying off for Paulson. The billionaire’s hedge fund saw a massive gain of $463 million on Wednesday on the strength of its investments in pharmaceutical companies. That is only the beginning of the windfall Trump’s election provides to his billionaire donors
http://www.huffingtonpost.com/entry/donald-trump-hedge-fund_us_5826076ce4b02d21bbc8781e
Mnuchin on Fannie Mae & Freddie Mac: we gotta get them out of government control
http://www.foxbusiness.com/politics/2016/11/30/steve-mnuchin-time-to-jettison-fannie-mae-freddie-mac.html
Common shares likely have the most upside. Bill Ackman recently projected $23/share for Fannie Mae, while Dick Bove estimates $18
https://www.benzinga.com/general/politics/16/12/8760513/why-preferred-shares-may-be-preferable-for-fannie-mae-and-freddie-mac
What Treasury Nominee Steven Mnuchin Means for the Mortgage Market
Mnuchin shows willingness to rapidly change housing finance policy
Given that, housing finance is an area in which the Treasury secretary can have outsize influence. Mr. Mnuchin, for instance, will have to decide on the new administration’s policy toward lawsuits involving the companies. He also has say over the status of their conservatorship, under which they are wards of the state
http://www.wsj.com/articles/what-treasury-nominee-steven-mnuchin-means-for-the-mortgage-market-1480539516
Trump’s treasury pick gives hedgies 12B reasons to smile
Hedgies invested in Fannie Mae and Freddie Mac unwrapped an early $12 billion Christmas present from President-elect Donald Trump on Wednesday.
That’s how much value was added to the mortgage giants’ shares after Trump’s treasury secretary-designee, Steven Mnuchin, said one of his priorities was to “get Fannie and Freddie out of government ownership.”
http://nypost.com/2016/12/01/trumps-treasury-pick-gives-hedgies-12b-reasons-to-smile/
Mnuchin Wants To Privatize Fannie Mae And Freddie Mac
“We’ve got to get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government as long as they have,” Mncuchin told Fox Business Network Wednesday.
Investors have taken his comments to mean that the Treasury will no longer collect money from Fannie and Freddie, and that has the investment community excited. Stocks in both Fannie and Freddie soared over 45 percent since Mnuchin made his announcement, as investor believe he will privatize the firms.
Some hedge funds have been making this bet for years. William Ackman, manager of hedge fund Pershing Square, pumped $12 billion into Fannie May in 2014.
http://790talknow.com/foxfeedspro/details/item_359515/mnuchin-wants-to-privatize-fannie-mae-and-freddie-mac/
The '$5 Threshold' Trading Strategy Explained
When stocks cross the $5 barrier in a bearish manner and institutions sell, the market is flooded with shares and the price is driven down. When a stock rises over that $5 threshold, institutions and hedge funds can, and sometimes do, load up on shares.
Two such penny stocks with the $5 threshold approaching are Federal National Mortgage Association
FNMA 0.45%
and Federal Home Loan Mortgage Corporation
FMCC 1.59%
. These government sponsored enterprises (GSE) have received a spike in interest as president-elect Donald Trump's administration is expected to explore privatizing them and an ongoing court case will decide the fate of the GSE's profits.
http://www.benzinga.com/general/education/16/12/8760233/the-5-threshold-trading-strategy-explained
The conservator decides when to end the conservatorship not the congress
long live Steven Mnuchin
when will the conservatorship period ends?
upon the directors determination.
https://twitter.com/ckc12_rb
The morning after for Fannie and Freddie - Cowen puts GSE reform odds at 65%
Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) each blasted off by more than 45% following yesterday's selection of Steven Mnuchin to be Treasury Secretary, and his promise to get the government out of the companies.
With Mnuchin at Treasury, Jeb Hensarling chairing the House Financial Services Committee, and a new Senate Banking chairman supporting GSE reform, Cowan's Jaret Seiberg puts the odds of something getting done in the next two years at 65%.
Seiberg notes Mnuchin "knows" investors who are suing the government over the profit sweep, and understands the debates "subtleties" better than most.
There will be the usual media hysterics about enriching supporters, but the new president is less concerned than most with answering to that crowd, says Seiberg.
There are, however, "serious obstacles," including conservatives who view the GSEs as "an abomination," and would have them liquidated.
Source: Bloomberg
http://seekingalpha.com/news/3227928-morning-fannie-freddie-cowen-puts-gse-reform-odds-65-percent
How Sallie Mae Went Private, And How Fannie Mae And Freddie Mac Could Do The Same
On Wednesday, Mnuchin confirmed his appointment to the position and said that Fannie Mae and Freddie Mac can’t continue to be owned by the government.
“We will make sure that when they are restructured, they are absolutely safe and don’t get taken over again,” Mnuchin said. “But we’ve got to get them out of government control.”
Mnuchin didn’t provide details about the game plan for Fannie and Freddie, but some analysts have speculated that the Trump administration intends to allow the two government-sponsored enterprises (GSE) retain their profits and enter the private market. That could put Fannie and Freddie on the same path that student lender SML Corp
SLM 3.23%
took.
“Sallie Mae” also started as a GSE, but shareholders voted to cut ties with the government back in 1997. In the 10 years that followed, Sallie Mae stock skyrocketed more than 244 percent, more than four times the return of the SPDR S&P 500 ETF Trust
SPY 0.2%
.
http://www.benzinga.com/general/education/16/12/8759322/how-sallie-mae-went-private-and-how-fannie-mae-and-freddie-mac-could
Wisconsin officials OK speedy recount, defend tally
http://www.cnn.com/2016/11/28/politics/wisconsin-recount/index.html
Stein sues after Wisconsin refuses to order hand recounts
http://www.jsonline.com/story/news/politics/elections/2016/11/28/elections-staff-layout-recount-timeline/94539210/
must watch this video
Trump Treasury Contender Mnuchin's Mortgage Mess
The U.S. mortgage meltdown has the potential to claim another victim. Steve Mnuchin, recommended by the transition team of U.S. President-elect Donald Trump as Treasury Secretary, could come under scrutiny for his role in running OneWest Bank, a Southern California lender that carried out more than 36,000 foreclosures under Mnuchin. Bloomberg's Zachary Mider reports on "Bloomberg Markets." (Source: Bloomberg)
http://www.bloomberg.com/politics/videos/2016-11-22/trump-treasury-contender-mnuchin-s-mortgage-mess
If it is Hensarling, it is going to be disaster. He is not an anti-establishment. He has more power and connection that will alleviate the difference that trump had during the pre-election campaign with other GOP. I believe his chances are very obvious than the other candidates, if he wishes to take that position. And it is not going to be good news for release and recapitalization.
momentum is very poor today. there is a chance it might take a nose dive at the end of he day.
Many of the president-elect’s advisors are strong opponents of the Treasury Department’s net worth-sweep, and include a plaintiff in ongoing litigation about the legality of the third amendment to the Preferred Stock Purchase Agreements. One might surmise that this should increase the new administration’s support for enabling the government-sponsored enterprises (GSEs) to rebuild capital as a possible prelude to their eventual re-privatization. While eliminating the sweep could be done without an act of Congress, it would require approval by the new Treasury secretary and the current director of Federal Housing Finance Agency (FHFA), Mel Watt, whose term has two more years to run. Director Watt has suggested he wants to replenish the GSEs’ diminishing capital buffers, but there is no indication he supports recap and release as a reform strategy. Further muddying the waters is that we are only half-way through a congressionally-imposed two-year cooling off period that would make it very hard to execute recap and release.
http://bipartisanpolicy.org/blog/impact-of-2016-on-gse-reform/
What about other cases like TX, IOWA etc – DC circuit wont be binding but they are waiting to see on DC. TX one is interesting because it has new claim that is completely new. The claim is that FHFA is itself unconstitutional. This is based on having agency with unappointed head like CFBD this pointed out that FHFA also had that situation – this suit would void the net sweep
http://www.valuewalk.com/2016/11/bruce-berkowitz-fannie-conference-call/
We think case is obvious – biggest expropriation in history and Govt has resisted our ability in the discussions or making it public – now we know why – now we saw internal emails that the death spiral narrative was absolutely bogus and Treas knew about it. The Treasury has tried to draw “an iron curtain” over 100k pages the mother of all privilege laws even with outside private parties.
Sweeney ruled for us and the Government used extraordinary step to prevent that discovery. Did the President know or was he mislead by subordinates? We are eager to continue the discovery.
Is Govt denying and delaying? Yes as much as possible. And usually when denying they have something they are trying to hide.
http://www.valuewalk.com/2016/11/bruce-berkowitz-fannie-conference-call/
two of the judges seem very favorable especially on six key issues. We only need to win on one of them.
1. Was FHFA genuine and operating in solvent manner – obviously not if every nickel is given away as Judge Ginsberg noted. Government says companies were in death spiral but this is nonsense because they have generated huge profits – and Government itself knew this – Fannie CFO told them right before net sweep that they were massively profitable
2. Treasury imposed net sweep and HERA prevents that
3. Treasury exceeded authority for proceeding new securities after 2009 when net sweep happened in 2012.
4. Breach of fiduciary – self dealing for no consideration – its classic breach
5. Breach of contract – Right to liquidation preference and dividend stops on common and they are still doing it. Tres is paying itself dividends
6. Breach of good faith – No one would give them $33B they raised in offerings if they could just send money to affiliated entity.
These 6 are key and we think we should prevail. We could get $20 a share on breach of contact claim.
http://www.valuewalk.com/2016/11/bruce-berkowitz-fannie-conference-call/