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I like FNMAS given liquidity
Exactly. That's why you want to be in prfd not common.
Now would be totally the wrong time. He'll let congress and various groups debate, offer their input. Then on some random day in Q3/Q4 the announcement will be made of what is going to be done. Assets transferred to a new utility model, sr. prfd determined to be paid back as result of NWS payment compared to original bailout deal, jr. prfds paid off and a brand new IPO.
It has contractual rights to be paid (unlike common) and they can start with clean slate, reissue for less.
When they call the prfd's at par, liquidate the existing entities and transfer assets to a new entity for a new IPO, I wonder if you'll still be on the board? My guess is no.
When it's all said and done, prfd's will get par and common shareholders will get screwed.
Breach of contract against common is worthless...ZERO!
Only prfd have actual contractual obligations so "owners have a claim" does NOT mean the common have anything.
The people close to Trump all own prfd shares. The only other person is Icahn and it is unknown if he still holds common.
The ruling on APA destroyed any claims common had. Literally a torpedo in the hull of the common class. The only class that has any moderate degree of rights now are the prfd (decreased but unbelievably better than common)
The gov will reap the biggest rewards followed by the prfd. The common will likely wind up with scraps. $60 common pps is an absurd and baseless calculation. They need a capital raise of $70-100B so yeah, I'm sure they'll cancel those warrants.
Both guys are well connected. pps following. Even it were true, still plenty of risk in recap structure - more so for common
GS prfd trader: rumor that Mnuchin may not take next sweep payment
Just responding back.
I think that's exactly what you should do.
Contractual rights, Sweeney, higher capital structure placement, close ties to admin. own prfd.
Yeah - anythings possible, but common has absolutely zero to stand on anymore. If it gets back under $2 maybe it's worth a small position as a gamble on hope and/or luck.
Completely inaccurate. That's why the share classes are not correlated.
No crystal ball just a good pair of eyes.
Commons are going to bleed lower and lower while smart money pushes back into prfd.
Wrong. One has contractual rights and is higher in the capital structure, the other has none.
I don't even know where to begin. Given the risk, the legal case losses, the recap needs and the lack of contractual rights - common are no where near equal footing to prfd. They HAD a bigger chance of greater gain and NOW they have a greater chance of significant loss. Whatever though - read the recycled beliefs on here and try and make up positives narratives as you ride her down. For those who care about conserving their capital and want to invest in the GSE's, prfd are undoubtedly a much safer play after last Tues.
That's because your confirmation bias prevents you from seeing that the case for commons is no different than putting your money on a roulette wheel. If that's how you invest, as I said BOL.
I don't have or want to take the time to rehash, but commons have zero leverage and virtually no legal leg left to stand on. Prfds have contractual rights and even they certainly not a definitive guarantee by a long shot. Owning common shares simply makes no sense to me based on the FACTS of what has transpired. You obviously own them so GLTU.
The two breach issues pertain only to prfd. Perry ruling means commons do not have a case unless overturned.
Bingo. Yes it's about the capital structure and it's about contractual rights and no it's not assuming a liquidation. It means that whatever happens, Mnuchin will protect those contractual rights likely to be upheld in court (as they were on Tues) whereas the common has no existing leverage. This is the pure fact barring a successful en banc or SC appeal.
Meaning only the prfd have leverage now. Find yourself some great attorneys and ask them how this ruling helps commons.
Bring it.....lol Sorry doesn't apply to common.
I never mentioned anything about BK. You will likely be diluted to virtually nothing and you have zero leverage to prevent that. So keep posting about lemmings and level2 - see if that makes a difference. You're a classic case of someone whose been in the commons forever, but can't make the switch no matter the evidence in front of your face.
It's not speculation that the common are a far weaker, riskier investment as compared with the prfd. Simple fact unless you're so married to your position that it blinds honest judgement.
Because a lot of people aren't aware of some of these things and I don't want to see them lose money. Maybe they won't, but the facts are like it or not (and it wasn't easy for me to sell a huge position in common)that the prfd shares are much safer and do have some leverage. Tues changed everything for the common.
and some extremely high level attorneys and some very large funds close to Trump and the only claims that survived last Tues ruling, but never mind that.
Yeah ok - one guy with virtually no relationship with current admin. He'll be the perfect scapegoat of an evl hf guy getting screwed while those closest to admin in the prfd make off with 20% of the company.
Wait for the day when Ackman reveals that he's sold his common shares.
So look at it with an open mind. The media doesn't cover the truth of this story at all, court rulings are a travesty that say gov can do damn near anything under HERA, opponents continue to push a false narrative and those closest to Trump and those closest to Sessions are on the prfd side. The writing is on the wall yet everyone is so stubborn that they're going to just hang on to common. Prfd will likely receive a conversion offer to common that will be at or close to their par. Common have zero leverage and no one on their side.
Recent letter to shareholders
The focus of that case is mainly on prfd rights. Remember Fairholme owns only prfd because:
"We are frequently asked (i) why we own the preferred stock of Fannie Mae and Freddie Mac instead of common shares, and (ii) how this story ends. Our answers are simple: the provisions of the preferred stock contracts that we own provide us with greater security and certainty than the common stock and, as you know, we are not speculators."
It's how it's done is the point, i.e prfd settle for 20% of the company, gov takes 80% and common is left with some ultra minimal residual value. All I'm saying is that there are way more adverse scenarios now where commons could get screwed and considering they have zero leverage, it's not an intelligent bet IMO.
As to your part 1, the court ruled against us. The points you raise will be pertinent in Judge Sweeneys court where the focus is on prfd rights. As far as an en banc or SC, maybe they will rule in favor of P's, but time is not on the common side at all. Also an en banc would be in front of something like 4 reps and 8 dems so that's not a positive IMO.
As to part 2, the commons will likely be so diluted it will not matter what voting rights that have. The gov is the controlling interest and will dictate accordingly.
My goal is to make money and I honestly could care less as to what class of share allows me to do that. You can't look at this investment given Tues decision and say that the prfd shares aren't a much, much safer play. Everything's subject to change, but the commons have a lot less going for them as of right now.
One of best posts I've seen from very well respected attorney:
"The reason I say that common & warrant positions are not necessarily pari passu is because of the issue of order of operations.
Can the warrants get a better result than the common? The answer is yes -- by simply converting last.
First dilute the common using junior preferreds. (The actual amount of conversion doesn't matter. Give them 20% of the eventual company and the common 0% or give junior preferreds 10% and common 10%. Set the slider wherever you want.) Then convert the warrants and dilute both the junior preferred and common.
Alternatively, you can dilute the common by doing a two-step recap. Raise outside capital and dilute commons. Then convert the warrants to dilute both new capital and old capital. Notably, you can even set this at a price that makes the outside capital relatively happy.
Let's assume $75 billion of capital requirements. So then you can raise $15 billion from outside capital to dilute the old common to almost nothing. Then you can immediately use the warrants at an upwards adjusted strike price to have the government inject $60 billion to the company. New capital owns 20% of the company, government owns 80% of the company, and old common owns very little.
Now it doesn't have to be that drastically bad for old common -- but my point is that the assumption that the common shareholders stand in the same place as the warrant holders may not necessarily hold true.
And, of course, this is why I prefer the preferreds. (No pun intended.) The preferreds at least have legal claims that can be used as leverage -- the common no longer has any leverage."
I wouldn't want to be your money
Paulsons in prfd
Rationalize and hope. Prfd still have some solid rationale behind them. Commons have nothing. With this decision, they went from high risk to just plain stupid to hold onto.
He can dilute you down to nothing or he could pay off prfd and transfer assets to a new entity, i.e brand new offering. Common have no leg to stand on anymore.
You're deranged and have obviously become married to your position. That is guaranteed failure. Mnuchin has the all clear to now to wipe out commons. Prfd will eventually get par. I could have liquidated either position common or prfd, but there is no question what to do unless you're being blinded by being stubborn and/or clinging to false hope. The odds that common will work out as a good decision are no where near high probability anymore.