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I have my doubts as well. Not a single politician has even acknowledged, must less commented on, the jury trial victory.
Any sign of Elliott Stein?
US Treasury argument in upcoming Lamberth Trial$FNMA $FNMAS pic.twitter.com/p2TNPmvfGN
— Jarndyce Jarndyce (@JarndyceJ) June 19, 2023
Hmmmm
This guy has 1 million followers. That's a lot of visibility. We need to blow up the replies to this tweet in order to drive awareness
Did the US Shortchange Investors $27 Billion?
— NEWS MAKER (@NEWS_MAKER) September 24, 2022
A coming trial will determine whether the government acted in good faith in bailing out Fannie Mae and Freddie Mac. https://t.co/rqzuOEbWrU
Thanks. Very Helpful
I heard someone on CNBC say that they cover stocks based on the number of ticker searches on the CNBC website. Maybe we should flood the zone by bombarding the search bar with FNMA and FMCC searches
I agree that there will be more of a FOMO squeeze than a short squeeze.
I totally agree
I think Liotta is right:
"The opinion I suspect will be quite complicated. The longer it takes, the less likely it is a simple remand as some believe (always still possible.)"
Other opinions, updates to the case, overall sentiment.
— Marcus Liotta (Tech, SCOTUS Plaintiff) (@MarcusLiotta) May 26, 2021
A lot has happened, broadly speaking.
The opinion I suspect will be quite complicated. The longer it takes, the less likely it is a simple remand as some believe (always still possible.)
There are only 3,328,454 shares short, meaning only 1 day to cover. That's not much fuel for a short squeeze, although those in the short camp would feel the pain.
https://www.otcmarkets.com/market-activity/short-interest-data
Most of you have probably seen this, but I just stumbled upon this Tim Howard lecture:
With a Net Worth $30.2B and anticipated ~$20B (for Fannie's portion) of
Requested Derivative Damages via Collins (because all lawsuits must be settled before any capital raise), there is tremendous Value in FNMA beyond the value of the Preferreds ($19.1B). And they continue to churn out $300-$400 million every week while the process plays itself out in the courts
$5 Billion Boom!!
https://www.fanniemae.com/media/39116/display
Net interest income up 26% compared to Q1 2020. Very strong retained earnings. Now we just need to get the liquidation preference wiped out by SCOTUS!!
good point
Louie, I know the court has said that the liquidation preference claim will be ripe only if there is a liquidation, but do you have a link to the Sweeney judgment that says that the takings claims will be ripe if the warrants are exercised. The logic that the court used in Perry to say that the liquidation preference is not ripe would certainly seem to apply to the warrants as well. I just couldn't find the link to the specific document where Sweeney says that.
Thanks.
https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2013cv1025-51#page=52
1. The Plaintiffs’ Liquidation Preference Claims Are Not Ripe
“A claim is not ripe for adjudication if it rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at all.’” Texas v. United States, 523 U.S. 296, 300 (1998) (quoting Thomas v. Union Carbide Agric. Products Co., 473 U.S. 568, 580-81). An analysis of the plaintiffs’ contentions regarding the liquidation preference written into their preferred stock certificates is uncomplicated. The certificates grant the plaintiffs “a priority right to receive distributions from the Companies’ assets in the event they are dissolved.” Individual Pls.’s Opp’n at 5.37 Therefore, by definition, the GSEs owe a liquidation preference payment to a preferred shareholder only during liquidation. It follows that there can be no loss of a liquidation preference prior to the time that such a preference can, contractually, be paid. Here, the GSEs remain in conservatorship, not receivership, and there is no evidence of de facto liquidation."
The point is, they were not in a death spiral, as the government has claimed in sworn testimony, and the government knew it. Their motivation for sweeping the profits, according to the document, was in order to wind down the GSEs, which they were not allowed to do without transitioning to receivership. A receivership would have required written notice to congress, per HERA.
Of course, these facts are only relevant if you are interested in Facts, mr. facts.
"Fannie Mae has paid $25.4 billion in dividends back to Treasury and Freddie Mac has paid $20.1 billion in dividends back to Treasury. AS A RESULT, the current net investment in the GSEs is $142.0 billion - $90.8 billion for Fannie Mae and $51.2 billion for Freddie"
They are incredibly relevant in debunking the "death spiral" defense in the APA portion of the Collins case. They are also incredibly relevant in calculating damages if the government has already admitted that their investment has been repaid by the dividend already paid. This would suggest the "10% moment" is not calculated off the full $187B, but should be calculated off an ever decreasing principle.
So, mr. Facts, are you saying it is old, or are you saying it is not relevant? Do you think a judge (i.e. Judge Atlas on the remand) would be interested if the government admitted that it has already recouped some of its investment via dividend payments?
US Gov draft Q&A on PSPA amendmenthttps://t.co/cjg6XULsEd
— Jarndyce Jarndyce (@JarndyceJ) April 22, 2021
"How much bas the government's investment in Fannie Mae and Freddie Mac cost taxpayers to date? What is the expected lifetime cost?" $FNMA $FMCC $FNMAS $FNMAT
Apart from a favorable SCOTUS ruling (or potential lower court rulings), by my calculation this amendment fairly well caps legacy commons at roughly $8 in the short term
Quote: All equity raises after that have their proceeds go to Treasury instead of FnF, and the senior pref liquidation preference gets reduced by that amount.
I'm not quite sure where it says the senior liquidating preference gets reduced by future equity raises? Can you post a quote from the amendment that says that, or is it an assumption?
Tim Howard:
"Three percent of Fannie’s adjusted total assets at June 30, 2020 was $116 billion; three percent of Freddie’s was $83 billion. With a $70 billion cap on both companies’ external capital raises while in conservatorship, Fannie would need to retain at least $46 billion in earnings (and more with growth) to meet the 3% capital threshold, while Freddie only would need to retain $13 billion"
Tim Howard:
"With a $70 billion cap on both companies’ external capital raises while in conservatorship, Fannie would need to retain at least $46 billion in earnings (and more with growth) to meet the 3% capital threshold, while Freddie only would need to retain $13 billion. It’s also curious (to me, at least) that Treasury would think either company could raise $70 billion in outside capital while still controlled in conservatorship by a hostile FHFA director."
I'm not quite sure why Mnuchin didn't go ahead and exercise the warrants right now? Why leave that Yellen? What would be the strategy?
Maxine looks at this as a gift to Hedge Funds, which are mostly PS.
My understanding is that the lower court ruling (5th circuit) suggested that the SPS was repaid, meaning no liquidating preference. But I may be unclear on this issue. Perhaps someone else from the board could quote from the 5th circuit ruling where it addressed this issue
If the Net Worth is allowed to increase to the limit of the capital rule, that would be roughly $280B
If the "liquidating preference shall be increased by an amount equal to the increase in the Net Worth amount" (section III)
and "If the company shall issue any shares... of up to $70 billion... then the company shall pay down the liquidation preference of all outstanding shares of Senior Preferred stock pro rata."
This would seem to cap their ability to pay down the SPS, meaning the liquidating preference will always be there. And it will always require a 10% dividend until it is gone. Who would ever put money into that?
I just fail to see how any serious new investor is going to put money into FnF if there will always be a liquidating preference sitting above them and that liquidating preference is taking all of the profits. Therefore, they will not get to 3% CET1 through capital raises
Exercise of the warrants does nothing to reduce the liquidating preference or the dividend.
My understanding is that the dividend does not kick in until they hit $250 (or their Capital requirement). But yes, after that the dividend will prevent them from benefiting from most, if not all of their earnings.
I'm afraid you assumed wrong. I actually agree with you that the CS litigants will favorable welcome direct claim rewards of offered in a settlement, which would clear the litigation hurdle.
The questions I have relate to the possibility of raising outside capital while C-ship and liquidation preference still remain. The dividend on the Liq Pref is going to kill earnings power, even if they pay down $70B each through capital raises
That's the way I assumed you would answer
I think I have an answer to this, but I'm curious why you think Common litigants would settle?
The problem is that JPS are not the only litigants. There are CS litigants as well, even in Collins
Exactly