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Very well said. Kudos.
I agree with you 100% on Calabria's hesitancy to act. I think he found the change from a staff position to a line Directorship to be a mountainous challenge. One he was not well prepared for.
I do think he is trying, which is more than Mel Watt ever attempted. Will it work out, soon, or be too little, too late? I guess we will know in the next 6 months.
The civil unrest catalyst Bove cites struck me as extreme until I saw the overnight news from Warsaw, Poland where controversial Supreme Court decisions set off massive civil unrest in what normally is a very serence part of Europe. With the new "balance" on our Supreme Court, I wonder if maybe Bove's vision applied to housing and Fannie Mae and Freddie Mac may hold more gravitas than I sensed at first blush.
Bove's historical look back at Fannie Mae back in the late 60's and the lead in to the formation of Freddie (1970?) were a sound refresher that resonated with me. Maybe Bove is really on to something worth considering. Affordable housing has been an igniter of the U.S. economy during several periods of economic and social challenge. Why not in a rebuilding process after coronavirus?
Nice to see Bove painting a positive rationale for why FnF matter and why they deserve to be preserved and nurtured, not bled dry and starved for the government's parasitic jollies. Thanks for posting the link.
This is getting crushed by shorts. The hedge funds are smelling blood in the water like back in February when the virus numbers started to climb. I like Rocket, long term, but I am accumulating cash, too, anticipating some great buys during tax loss selling season. I am mostly parked in high yield MLPs and REITs until buy time arrives.
Good luck here. I have concerns that the cool down in the refi market may be problematic for RKT's forward guidance on November 10th,
I totally disagree with you. For common shareholders, the metric that matters MOST is earnings because that is the driver of anticipated share price, once conservatorship concludes. It is also the driver of perceived, future safety and soundness from a regulatory perspective.
There are 3 analysts that follow FNMA on revenue. There is only 1 that follows them on Earnings and gives buy/sell/hold guidance.
Bove is the only recognized analyst that follows FnF. The frequency of his comments is no greater than other analysts that issue regular updates on assigned equities they follow.
Bove gets interviewed a lot after so many years spent before TV cameras. He is not the devil you suspect. He would go to prison for doing what you suggest. Besides, he only has 6 formal buy/hold/sell recommendations in the last 6 months. See link I posted earlier.
I take no offense with your post. I just think you miss the point. FnF don't need Buffett to make them successful. What they do need is a huge Sugar Daddy that understands the risks in their business and is willing to own the first 10% of adverse market risk. There are few new capital investors that meet that requirement and won't try to micromanage the twins (unlike Icahn, Tepper, etc.).
WB has stated previously that he regrets exiting, years ago. I think a re-entry would be a perfect fit.
JMO.
The fit with Buffett's portfolio is rather compelling for renewing positions in FnF. He owns one of the largest home insurers in Geico and also realty firms in Berkshire Hathaway Real Estate. There are huge synergies, but especially in the actuarial magic that creates successful insurance providers of all types. As for identifying and flagging counter-cyclical trends before mainstream economists react, this was a proven phenomenon in 2007 and 2008. Realtors knew there was a problem, long before any bureaucrat knew, anywhere inside the DC Beltway.
You are VERY hard on Dick Bove, undeservedly so, IMO. He is simply the banking/financial services analyst for Odeon which is a highly respected NYC investment firm. He has been a staple on CNBC for years, and actually was a supporting voice in exposing government's trampling of GSE investors for a sustained period of time. Just because he disfavors FnF as investments for now does not relegate him to the same ilk as Corker or Parrott that actually sought to detroy FnF. He just sees weakness in their present predicament.
And contrary to some animatedly claimed complaints that Bove and Odeon are stooges supporting hedge funds... the JPS "evil empire" to some... they actually compete with hedge funds for clients and play NO ROLE in srrving the JPS holder's agenda.
https://www.tipranks.com/analysts/richard-bove
I actually bought WFC based on his "Buy" recommendation; still think it will pay off big in 2021.
Yeah, sure, except that ACG A's business promise is that they are the investment advisor with premier understanding of the political landscape and its impact on stocks. They are paid to anticipate the impact of event driven (virus) and politically driven (polling numbers during campaign season)... not just keep using change as an excuse for flailing predictions.
I actually find Don Layton's stuff more cogent and attuned than Gaby's sophistry that routinely escapes reality and actualization. And his analysis is pro bono.
Host of court filings docketed, yesterday. The CFC conjoined Appeal is getting a lot of scrutiny and energy. Three new Amicus briefs filed, two pro-Plaintiffs and one pro-government. All up on Glen Bradford's gse links site.
Thanks Glen.
Gaby has become the new TH717, or the new Cryptonator. Everyone lingers on every word and every prediction... until time calls their bluff. I find the ACG Analytics stuff entertaining, well-presented stuff that arises more from the Edgar Cayce era than the Nostradamus era. Said another way, it's like a tasteless nothingburger.
Want proof? Their three major RealVision conversations sequentially favored preferred stock, common stock and, now, back to JPS. The ricocheting bullet inconsistancy is not indicative of high value investment analysis.
The people I follow with genuine interest are Calabria and Mnuchin and Berkowitz and Ackman from the "skin in the game" perspective, and Pagliara and Howard from the reputational perspective. The rest is just "noise" IMO.
I bought some AMZA, FRO and MLPX for now.
GET READY!!!
More topical would be breaking down Gaby's latest predictions from ACG Analytics.
Down over 15% since the mid-August highs @$2.28. Dow and Nasdaq are down less than 4% during the FNMA descent. Declining volume is no bueno. Sets the stage for a tax-loss-selling entry point coming up after the election if there is no Consent Agreement after a Triump loss... per my earlier post on this.
I cleared a huge position in Nokia and Rocket, as well as my earlier amassed cash position, to add to my dry powder stash to harvest this opportunity if my expectation gets realized.
GLTA.
The plan is dysfunctional and the new CEO is an idiot. Sold entire position. Loss of Verizon contract is a stinging rebuke and unrecoverable loss in 5G momentum.
GLTA.
OUT!!!!!!!!!!!!!!!
Sold position at no loss. I will keeep this on watch list, but too much ucertainty for now. Huge bargains, elsewhere.
GLTA.
Sure, I'll try and help clarify the $30 B vs. $125 B v. $300 B question.
The $30 B figure is what FnF have paid over and above the SPSP dividend agreement @ 10%.
The $125 B figure is the total amount paid above and beyond the $187.5 B bailout amount.
The $300 B figure is the dreamworld figure that assumes FnF can just keep the $187.5 B as some "gift" from taxpayers. Yeah, sure, like that's EVER going to happen!
Correct! Until the Proposed Enterprise Capital Rule gets confirmed by Calabria.
Bullshit! The combined GSEs have <$45 B in CET1 capital.
Then they are critically under-capitalized under FHFA's $240 B proposal, do not pass "go" and immediately enter receivership.
Not a positive outcome.
If you void the SPSPA, FNMA must give back the $187.5 B. It's not just the GOV that must go back to where things were on September 6, 2008.
Do you realize that any such action to do any of this would trigger an immediate receivership? The Treasury backstop would be cancelled and the critically under-capitalized enterprises would go to liquidation, in all likelihood.
This is NOT helpful perspective to investors.
Both Fischer and his co-plaintiff Reid were common shareholders, only. By recollection, Fisher had around 3000 shares and Reid had around 30,000 shares in their derivative action filing.
Thanks for extinguishing my hope for good news, tomorrow. I'm sure you are right. There will be no good news and this stock will continue to languish in nothingburgerland.
Interesting twist for Earnings Day, tomorrow. Both FNMA and FMCC are releasing on the same day, then holding staggered conference calls... Fannie @8:00 AM, Freddie @9:00 AM. I never recall an arrangement quite like this before. For Q2 results, Freddie released on the 27th, Fannie on the 30th. The CC's were at similarly scheduled times, but on different days.
May be a big nothing, but maybe, too, there could be some major announcement that needs to be released in tandem before the market opens. That likely would only be GOOD news, IMO.
Government's legal team cannot defend FHFA's legality after Mark Calabria's testimony before Congress on October22, 2019... almost exactly one year ago... when he stated that he was willing to "wipe out" investors and remained willing to do as he had earlier said in 2008. This smoking gun puts government lawyers in a rock v. hard place dilemma because defending Calabria (who is a named defendant in Collins) would be proof positive that his actions were clearly designed to wipe out shareholders in an absolute confirmation of the presumptive Parrott e-mails.
"It ain't over until the Supreme Court sings in Spring."
Patience, ladies and gentlemen.
Patience.
The uncertainties are crippling for the future of current investors, but perhaps more telling, also for potential, new investors considering new equity needed for capital requirements that justify release. The only adamancy being expressed is via ACG Analytics, not necessasarily the most definitive source of investment certainty when measured against Howard, Pagliara, Vartanian, Bove, Layton, Calabria, Mnuchin... ad nauseum.
I am hoping for clues from the ACA event on November 10th. More clues from December 9th. And maybe some clarity after election day. In a Biden win, there will be huge media focus on who is being vetted for Cabinet and upper tier Administration posts. We may know more from that than anything else if nothing like a final capital rule, consent agreement or SPSPA re-do are announced and stuff remains in limbo until after January 20th.
It is very frustrating.
Sure. That's the good part. But does it mean things go back to a 10% dividend forever? That could be the bad part, if so Linda Goldstein has been arguing since 2014 with Dechert that the shareholders should own, at minimum, the 1st ten percent of any non-cyclical hit before any government aid is extended to private enterprise firms. That sounds like the possible basis for Calabria' "Mass Capital Proposal" in concert with Vartanian's comments in Rulemaking, and his attorney's brief filed before the Supreme Court.
The puzzle pieces seem to fit a little to comfortably for my endorsement.
You will never gain recognition of the indisputable fact that the $33 B in JPS par value only hold value IF the conservatorship ends, dividends resume or some lucrative settlement (conversion or consent agreement) nets them some advantage that doesn't exist, today. Not all investors want to accept this reality.
If the campaigns to raise additional, outside capital fails to pan out, the JPS are screwed far worse than common shares who ride it out and see their share value climb, steadly, during the recap process as their value basis is EPS-based. This, of course, assumes that the SPSPA is emasculated which is a condition of either common or JPS ever finishing in the money.
In a retained earnings based recap, the $33 B JPS counts as risk-based capital, just not CET1. As such, there is NO necessity for any conversion, whatsoever.
Yes, Vartanian has an agenda. I just suggest you make certain that aligns with your own.
The Deschert/Vartanian narrative and Linda Goldstein's active presence as attorney of record are deeply problematic and represent a potential reprise of the Crapo era initiative to wreck the GSEs with 10% first loss anchors that would potentially sink the future of these enterprises, were they restored to fully private enterprise status. It seems to be little more than the age/old complaint about "the shareholders win in good times, and the taxpayer covers them during bad times" platitudes.
Ending the NWS and removing the government's avoidance of judicial blowback is noble, but using such reduction of government excess accomplishes little if it is only the fulcrum to substitute a utility model that only punishes long-aggrieved shareholders, IMO.
Berkshire Hathaway did a warrant purchase with Bank of America and made $17 B upon exercise. The idea is not far-fetched, at all, in the Fannie Mae case.
ROLG is a smart dude. A little too cozy with JPS, but very knowledgeable in many facets of the FnF saga,
I want to correct a misstatement I made yesterday regarding Judge Sweeney. The President did not discharge Judge Sweeney before her term was up. Her term of 15 years expired on October 19th. He had the option of renewing her appointment for another 15 years since she was not at 70 which is the court's retirement age. Instead, a new, younger judge was nominated but has yet to be confirmed by the Senate. So she wasn't fired, just ignored.
Judge Sweeney may be asked by the new Chief Justice to stay on as a Senior Judge and take whatever cases she determines would best serve the interests of the court. My revised opinion is that Sweeney will be asked to stay and likely remain on the FnF cases, as before. The CFC has seven vacancies, at the moment, and another expected shortly when Judge Wheeler's term expires. Many Fannie-followers will remember this Judge, too.
If asked to stay, Sweeney could decide to retire, but Senior judges enjoy a very lucrative annuity package that is highly coveted and explains why so many justices stay on.
There will be an update shortly as further dockets are released.
Sweeney's presumed involuntary exit could... could... be the last gasp attempt to drive JPS litigants into moderate capitulation and settlement before a hard line judge sends them spinning into the ethernet.
Two Pence proteges at the fulcrum point of the RRR endgame? And maybe a third, come Monday, if ACB gets confirmed?
Interesting days ahead, guys and gals.
Everyone have a nice weekend. Get ready for yet another weekend Delete-A-Thon in Fannieland, tomorrow.
We agree. We'll know when we know anything for certain.
The thing you must remember is that Trump fired Sweeney before her term was up. She may stay on the court, but not as Chief Justice. Obviously the White House had a reason for getting Sweeney out of the court's drivers seat. She was removed for some reason and replaced by a Pence protege. Could be that the event matters more than Sweeney's future role, if there is one, in resolving Fanniegate.
I hope you are right. But Sweeney is being replaced by V.P. Pence's former chief legal counsel before the bench appointment 9 months ago. That means she shares the Pence loyalty team with Dr. Mark Calabria who has the same pedigree. Looks to me like "the fix" could be in for a Cato Instituteb "flea flicker" play and an uncertain outcome.
We will know better if/when it is determined Judge Sweeney's future CFC status. Is she kept as a Senior judge? Does she retain hearing the FNMA/FMCC cases previously before her bench?
Just a lot of uncertainty, for now. What I find troubling is that this is NOT any mandatory retirement event. Someone wanted to make this change, and there surely is some reason for this that remains unknown.