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Yeah because this investment and the choice of series is based on a 20cent price fluctuation on a given day.
All completely irrelevant for commons because of the CAPITAL BUFFER that is going to be $100B+. Dude, you are seriously a lost cause if you don't get that after all this time.
Hey, I used to be 50/50 common/prfd and made the case for owning both on this board a year ago, but facts/situations change. Blind love is spot on!!
I'm not trying to save anyone and I could care less if you all lose your money. I'm betting that common in fact will. I'm simply shocked that with so many here preaching their love for common, not a single person has a coherent argument for why. Apparently there are only a few of us who think that's pretty f...'d up, but hey good luck.
My objective is to make money....period. I look at sources that don't agree with my view so that I don't simply fall into confirmation bias. This board is 99% people regurgitating ridiculous theories, ideas, misplaced focus and literally almost no solid reason for their position. Maybe you should focus less on emotion and more on the facts.
That is the thesis coupled with some good ol' math. Or you could be in common with grandiose dreams based on nothing more than hope....LOL
Almost right, but as Jim Hodges points out there will be just enough cash to pay the prfds if receivership were to occur.
https://twitter.com/ValuInvstrToday/status/857031693479411712
Do you really not get that it's all about the capital buffer for common shareholders!?
"But I guarantee he and Mnuchin have discussed FnF and Mnuchin and Watt have discussed FnF.... those links mean good news for us shareholders."
This is about as sound as, I know a guy who knows a guy who works with a guy who says that he's buying Fannie Mae common shares.
Sounds like a really well thought out and defined investment thesis.
Look at what has changed with the common thesis and the news that comes out everyday. Holding common has to be the stupidest decision one could make at this point and I owned a very large position in it this time last year. The majority here are truly deranged and drunk on hope.
Swing for the fences means multi-bagger. Say what you want that either class is gambling. The big, smart money are in prfds for a reason. Capital structure and contractual rights are not gambling. Owning common stock in a company that is going to require probably at least $100B with no contractual rights would be the essence of gambling. And what's the gamble? That they somehow won't require a huge, huge capital buffer when everyone involved is talking about tier one safety to protect the tax payer???? Sounds like a smart play......
Steve Eisman: Notice the smart money own prfd
Steve Eisman on his long-shot play : “I own Fannie Mae. It’s like owning liquid nitrogen.” $FNMA pic.twitter.com/UnZTYg0MQY
— CNBC's Fast Money (@CNBCFastMoney) May 15, 2017
Dude really? There's no "jumping" on any of these boards. It's iHub. Bunch of momo's saying the same thing as if it will make it true. Although FNMA common has got to be the worst example ever of complete and total bias.
I care because the idea of a board is to work through investment ideas in order to make better informed decisions. At least that's what I thought before reading this one. It's 99% of people who have no clear, fact based reasons for why they prefer one class over another common or prfd. I just think that it's funny how people here just want anyone who doesn't regurgitate that common is like some new found lottery ticket to just go away instead of being able to make coherent arguments for their position. Wouldn't that tell you that gee, no one here makes a good case for the common whereas the prfd seems to make much more sense based on all of the facts surrounding this investment?
It's exactly like liberalism on a college campus!!!!! My decision is based on pure emotion and I can't defend it at all so just make sure no opposing opinions based on fact and reason are able to share their view.
Seems like kind of an equal trade?! Apparently you missed the whole "risk" thing.
"Because you're wrong". Sounds like the typical well thought out, educated logic so prevalent on this board....LOL!
Under receivership prfd would likely still be paid and also have surviving contractual claims. Good luck with 60B or 80B. You just had Watt questioning Corker if $250B was adequate. Mnuchins been harping about taking gov out of the primary risk position so be prepared for a HUGE capital buffer. Or you can live in imaginary land with the common holders focused on hope, half truths and the inability to accept math.
This guy knows what he's talking about! At $100B capital buffer your math is correct:
12.31b NI x 14.62 PE = $179.97b Mkt cap
$179.97b - $19.13b pfd's = $160.84 mkt cap attributable to commons
$100b recap assumption
$100b / $160.84 = 62.17% weight of recap
100% - 62.17 = 37.83% weight value of total shares
5.893b current shares out / 37.83% = 15.58b total shares required
$160.84b / 15.58b = $10.32 pps valuation
So for everyone on this board, you could be diluted to hell in common with a much higher capital buffer, etc. or maybe you get around $10 pps if you're lucky.
or you could be in prfd without these huge risks + contractual rights that common don't have and wind up with $25 pps.
Why would anyone take the risk on common in comparison?
Don't you notice that no one here can provide a factual coherent math based argument for owning commontgat encompasses all that matters which is capital requirements, dilution and warrants? It's all bullshit reasons and "I feel good about my investment". I hope anyone with a brain can there's no solid theus here for owning common. This is why I raise the point! Don't be a gambler on BS reasons to own common. I personally care too much about my capital.
I'm not trying to convert anyone to anything. I'm simply making the point that whatever DD people here think they've done regarding common, where is it? Where's the math? Where's the capital going to come from? I'm just looking for anyone here to make an intelligent case for owning common and it's non-existent. The entire board is "lemmings", level 2, articles and actions that don't have anything to do with capital buffers/ dilution, etc, etc, etc.
I'm simply amazed no one can provide a solid thesis to be in common.
It's extremely fun and amusing. I used to own a ton of common and prfd, but when events changed I dumped all of the common because of the significant risks that have been outlined. The majority here hold common with nothing more than hope as the reason and are incapable of recognizing the changes that have occurred.
Ok....higher capital structure, no dilution, paid even under a liquidation, contractual rights - but yeah they're in the same position as commons.
Hahahaha........this is fun!
Nothing to do with ego, trying to run up shares (as if message board posts do anything) - it's about so many clueless people here making ridiculous statements, pointing to actions/events that don't matter to common pps at all and having no understanding about capital structure, necessary capital buffers and dilution. It's absolutely amazing - just like liberals on college campus these days. Instead of making any coherent arguments about common shares using math and reality, the rebuttal is please stop posting here....LOL Who the hell invests with this kind of mindset?!?!
Who here can answer this?
If Mnuchin comes out and says they have determined a capital buffer of 5% on 2 Trillion plus of holdings, please show me your math of how this money is raised and what the common is then worth? Then suppose the gov exercises its 80% right through warrants and that number then drops 5:1. I look forward to anyone here explaining their common pps using math and reality.
Every point you make is literally worthless and doesn't mean the common will do well. If Mnuchin comes out and says they have determined a capital buffer of 5% on 2 Trillion plus of holdings, please show me your math of how this money is raised and what the common is then worth? Then suppose the gov exercises its 80% right through warrants and that number then drops 5:1. I look forward to anyone here explaining their common pps using math and reality.
So what?! The issue for common is either they transfer assets to a new utility model and wipe you out or they keep the existing and have to raise a huge amount of capital in which case you get DILUTED. Just amazing that you and 99% here don't get this!
The real "lemmings" are the common holders because none of what you post matters when they set capital requirements as high as they will. You will be diluted down to nothing.
Common shareholders should be thankful that Watt never gave an answer on capital requirements discussed with Mnuchin and co. They are going to set a capital buffer extremely high so that they can safely state that there is ultimate safety and soundness. This will be the announcement that crushes common. No one to prevent, no close ties to admin, no legal ground to stand on and no one in the media will care.
When you buy shares of a company it is an investment in that company. Investing in common shares, I agree, is pure speculation. Investing in prfd shares is based on a contractual right, in addition, to a safer place in the capital structure.
They're referring to jr. prfds and the fact you don't know that is extremely symbolic of the majority on this board, who are based predominantly in nothing but hope instead of reality.
Best of luck. You're going to need it because your thesis on this investment is incorrect.
Every court case has been lost except for the prfd claim. There is a liquidation risk to the common capital structure because it makes it very easy to IPO a new utility model or any other new model where assets are simply transferred. You're stuck on the wrong points, it doesn't matter their making money. What matters are the court cases, whose in control and what is a likely outcome? Common has literally no protection on any level from getting wiped out and no one will care. Prfd is simply a much smarter way to play this and those closest to Trump own the same class not common.
The point of liquidation or bankruptcy references is that even in the worst situation prfd get paid.
You're up until literally one bad headline comes out and your money is gone. Yes - let's wait and see whose right.
It's called common sense based on the facts of what has happened with the investment.
Fortune March 2017
"For now, tempted investors may be best off buying preferred shares. Owners of those shares have a stronger case in the ongoing court battles. Even if Fannie and Freddie are driven out of business, preferred shareholders would have priority over common-stock investors in recovering assets in liquidation or bankruptcy."
The situation that has changed is the complete loss in every area of litigation only exception being prfd shares still having contractual rights. Commons have literally nothing.
Recapping and release doesn't equate in any way, shape or form to common not being wiped out. They will be diluted down to nothing or simply wiped out with the transfer of assets into a new utility model with a new IPO, i.e new capital structure.
Your failure to adapt to the new environment and marrying your position in common based on old info. will prove to be a huge mistake.
Posting age old info. has no value. The situation has changed in nearly every way. Common shareholders are going to get screwed. Prfd will likely get par.
All very true and very likely, but not the jr. prfd holders. They will be made whole regardless of how this plays out.
That's ok if you own prfd's!
MBA Proposal - Guess what happens when they spin off a new utility? Prfd get paid and a huge capital raise dilutes commons down to virtually nothing. Writings on the fall for those smart enough to read it!
MBA Proposal
The MBA proposal was recently issued by the Mortgage
Bankers Association, the national association representing
the real estate finance industry. This proposal would convert
the GSEs to privately
-
owned regulated utilities with
regulated rates of return that issue MBS with explicit
government guarantees. It provides for new entrants to
compete with the GSEs in that role. It also converts the
CSP into a government corporation that issues government
guaranteed MBS and offers securitization access to the
GSEs and other competing guarantors
–
with one objective
of this approach being to ensure fair access for lenders of all
sizes. Furthermore, the MBA proposal advocates for a
multi
-
year transition period that minimizes market disruption,
including advocating for various alternatives to provide an
appropriate MBS
-
level backstop for the GSEs’ existing MBS.
We commend this proposal for maintaining an explicit
government guarantee at the MBS level with some credit
risk shared by private guarantors, including the reconstituted
version of the GSEs as private regulated utilities. The
proposal is generally in line with our principles for housing
finance reform.