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I think it will be similar for sure, they will let FNMA investors raise money first and if warrants are left over the public will be able to purchase.
I really don't know to be honest, There are diminishing returns the further past 100% dilution you go. If Treasury decides to dilute only 3b shares vs 4b it is only $5b net difference. (assuming $100 PPS without warrants)
diluting 2b vs 3b is less than $10b in net returns and at some point this does more damage to the GSE's than it is worth. (best bang for their buck is 100% dilution or 1.2b)
I am pretty sure Mnuchin thinks the takeover of FNMA is bogus. He was my boss for 5 years (a little higher up on the totem poll) but I have talked with his inner circle about this and "bogus" was the term they used to describe what happened.
Keep in mind Brooks is running FNMA currently and he is Mnuchins close business ally. It would be a shock if he willy-nilly gave away the market share to TBTF banks that caused the securitization race to begin with(which led to the GSE takeover).
they will exercise the warrants but not all of them, 1.2b shares out of the 4.8b will be exercised. There is no reason to do anymore than that
I notice a lot of commons are selling, anyone know why?
If the nws was never initiated
I own 75% common and 25% preferred. My rationale is that the "worst case scenario (besides total chaos where commons are worthless) is that commons are worth $1.85 and that preferred is 50% redemption value. For sake of argument lets assume 100k investment. 75k into commons 27000 shares (assuming everything purchased today) and 25k into FMCCL or 2250 shares.
After worst case scenario we are looking at preferred shares to be valued at $56000 and commons to be at $49000 and you basically break even. We know commons with the warrants will be worth something and preferred will have a redemption value at some capacity. This IMO is worst case scenario based on the worst crooked corker plans I have seen.
Playing this opposite and being 75% preferred and 25% commons does lead to more money. 175k in preferred and 16k common = 191k. +91k vs my strategy , this is a pretty sure bet IMO but you do end up with less potential
I personally think they will at a minimum try and get the most out of the warrants while trying to keep the stock price as high as possible. Mnuchin knows that selling 1b worth of warrants or 4b makes no difference to the treasury. 4b at 20 PPS or 1b at 80 PPS makes no difference to him. So he will likely cancel off 80% of the warrants and sell just the 1b and dilute the shares only 100% vs the 500% dilution alot of people assume. This scenario doing the 75% commons yields you alot more money with only slightly more risk.
by the numbers you would be at full redemption stock price 112k + 2.16m vs 340k preferred + 727k in common. 1m vs 2.3m with this scenario.
Glen Bradfords afticle mentioned he thinks the article of the benzinga was written by someone with insider knowledge and that led him to sell his commons and buy preferreds. WOW fu$#ing Wayne Duggan is now a congressional insider. yaaa rigght .
the net worth sweep still remains as long as there is 3b in capital buffer retained by the GSE's.
there is a deal between FHFA and treasury to allow the GSE's to keep 3b in capital buffer. this is great news i would think but there are alot of sell orders. IDK how to trade this stock
http://sharpcredit.com/2017/12/21/fannie-and-freddie-now-allowed-to-keep-some-profits/
Watt Said “While it is apparent that a draw
will be necessary for each Enterprise if tax legislation results in a reduction
to the corporate tax rate, FHFA considers the $3 billion capital reserve
sufficient to cover other fluctuations in income in the normal course of each
Enterprise’s business. We, therefore, contemplate that going forward
Enterprise dividends will be declared and paid beyond the $3 billion capital
reserve in the absence of exigent circumstances.”
Friday 11:59 12/22/17 the govt shuts down if debt ceiling isn’t raised. This will be done soon, if we can avoid HR4560 being added to that we will make a hefty run to the $4’s. Should be an interesting 72 hours
Huddling with Treasury Sec. @stevenmnuchin1 & NEC Director Gary Cohn on Capitol Hill ahead of tonight’s historic vote on tax reform. @POTUS kept his promise - tax cuts by Christmas. pic.twitter.com/Kx6pDasdzx
— Vice President Mike Pence Archived (@VP45) December 20, 2017
fox news says it will be after nye
we dont need congress if 4560 doesnt get passed
Fox news is estimating that even if this all gets passed through congress it probably wont be signed into law intil after new years.
Schedue:
House vote this afternoon
Senate vote this evening
48 hours to enroll bill
White house review which could take a few days.
Then after all of this the POTUS will sign into law. Now he could do this during the Xmas-NYE break but more than likely he will wait till early January and have a big signing celebration with alot of people around.
I care bc this probably means HR 4560 has zero chance of passing before the Jan 2nd 2018 deadline.
What are you talked about, This is great news and probably the reason preferred shares are soaring !!!!
yikes 150,000 sell order on FNMAT
i think ill wet my pants... We were at $3.27 like 3 weeks ago. I would prefer some actual good news vs this day trader click bait ramp up before sell off bull $h!t.
having said that, keep the PPS increase coming :)
John McCain and maybe Thad Cochran to miss tax vote which could cause delays till after xmas. This could be a HR4560 delays also :)
yes but what he did makes sense and I am glad he did it. You are already paying the property taxes to the state govt....you should absolutly be able to deduct that from your income.
HR4560 is all we should focus on. If that gets passed corker puts us in check
Corker brings yes could be a good thing if hr4560 doesn't pass. This would give mnuchin a reason to act quickly unilaterally and decisively
where did you read that?
I was thinking this wasnt a good thing but this does force action on GSE....Mnuchin said he was going to provide his recommendations after the Tax plan is complete.
He says that bc he has no power to do anything until after Jan 2nd 2018 without congress. I dont think mnuchin is a champion of the common stock but he will do 2 things, make sure the GSE's are out of govt control and make sure when the treasury sells its penny warrants they are not worthless. those 2 things you can count on.
http://thehill.com/opinion/finance/365121-the-american-dream-is-at-stake-if-low-income-earners-cant-own-a-home
he will make sure the treasury gets his 80b.
the only good news I can think of in regards to common stock is that the treasury (legal or not) does own 79.9% of the shares and will not settle for 10 billion in revenue if the shares are sold. They will make sure those shares are with 80-100b IMO.
Fear is that the politicians are soooo crooked they will wipe all the shares out and just turn the market over to TBTF banks. but reality is Mnuchin will never let that happen.
when are they voting on this bill?
Didn't they buy the penny warrants pre2009??
https://rules.house.gov/sites/republicans.rules.house.gov/files/BILLS-115HJRes124IH.pdf
There is nothing in the house spending bill about HR 4560....where in the hell is this thing going to be thrown in?
look at AIG...this set the precedent and they were able to sell the shares
massive dilution has basically already happened. If you look at the shares outstanding it includes the 79.9% diluted by treasury. Now there is a chance that if jumpstart 2.0 fails they could cancel these shares after jan 2nd but i doubt it. we are basically looking at a $15 share price right now.
they can attach these riders onto other bills and have 1 vote on all of them. that may not be the case, unfortunately there isnt a whole lot of info out there on this.
arrrgghh thats wack. The budget will get passed
It is a rider attached to the tax bill I thought. Congress only has 1 vote before 2018 happens and it is tax reform. can you provide something contrary?
the govt holds 4b shares of common stock....they will sell these 4b shares at more than $5 per share
we dont want the tax bill to go through, Corker is actually going to save us. unless I am wrong if the tax bill fails then the jumpstart 2.0 also fails. This means mnuchin can act unilaterally.