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I will try to give you an honest answer. The main reason why commons (and JPS) are falling is because the momo traders who rode the steep rise are selling again as the momentum fades to take profits. The price declines come mainly from longs taking profits, and only to a small extent from shorts. There are also a lot of people who bought earlier at higher prices and are using the rally to lighten up.
For example, I could imagine that Amelia, who bought FMCC on Monday at around $1.10, sold at least part of her position when the downside began. She wrote that now that she is retired, she has enough time for day trading. I could also imagine that when Navy is not writing "boom, boom", he is taking profits from earlier rallies.
None of this requires short sellers to drive the price down.
Yes. Such is (Herba-)life
However, the common stock at both $FNMA and $FMCC is likely to end up worth little, @KBWfinthink said. #stocks #mortgage
— National Mortgage News (@NatMortgageNews) January 24, 2024
By @NMNBrad https://t.co/hy0vPZIEDB
When almost no one is short, there will be no "forced buying". Only the momo crowd will be left to lift prices. That's actually bearish for me. After NH I expect a "sell the news" reaction.
Maybe, but I think KThomp is right that most likely there will be no more new lawsuits, and that the remaining ones are mostly dead.
Bill Ackman advocates warrant exercise, so in this scenario the price for commons should be capped at around $15 max. His JPS are a hedge in the event that the government converts its SPS into commons and dilutes the commons heavily in this process. He made this hedge several years after buying his commons.
The last 15 years have shown us that the government has indeed had an unfair advantage in the FnF saga. And it has used "its" courts to fight tooth and nail for that advantage.
Perhaps today's reality is different from your textbook reality?
Some JPS boards are already closed, e.g. the board for FNMAT:
https://investorshub.advfn.com/Fannie-Mae-PRD-PERP-CALL-Ser-DIV-8-25pct-FNMAT-26495
If you click on the link, you can see that iHub even has a link to this (Fannie common) board.
In a capitalist country, Trump sees it as his duty to maximize profit whenever he makes "deals" - privately or as president. What's "communist" about maximizing profit in business?
Besides, I'm betting that Trump's FnF deal will end up successful. Getting rid of the seniors (either by conversion or write-off) is best for Fannie and Freddie as corporations, because once they are released they have a greater impact on the housing market, which in turn helps the US economy. So betting on Trump is NOT "betting against the US", as you falsely claim.
The reason I don't hold commons is because the JPS will be repaid regardless of whether Trump writes off the SPS or converts them, thus reducing my risk. There is also nothing "communist" about reducing your risk. In fact, it's textbook capitalism.
It would not be the first time that analysts have been wrong about something.
Another question is how long the KBW price target of $1.25 will actually be valid. Is it valid until release or beyond? What about dilution (at least through the exercise of warrants)? Will there be a reverse split after this?
Or is the "price target" only for gamblers who have a time horizon of just three days?
No.
Only if the stock is not suspended from trading before the news hits.
There are many traders/HFs who are short FNMA and long FMCC. They expect the gap, which is currently 19 cents, to narrow to the historical price differential of 1 to 2 cents. These traders are not covering shorts because it doesn't hurt them if both go up (or both go down). They are not evil minded either. It's just a kind of risk free trade.
Hold your breath?
Only when the tide goes out do you discover who's been swimming in a clown's suit.
You can explain it 100 times and still those who will never understand it anyway will not get it. Success in the stock market depends to some extent on intellect and knowledge. If you don't know the basics, you won't make any money and - unfortunately - you'll end up as a bag holder for those who do.
Wrong. I don't preach it. I just see it coming.
I would be interested to see if Trump - if re-elected - has the courage to appoint an FHFA director who is willing to eliminate the countless redundant jobs at the FHFA. That would probably trigger a medium-sized "earthquake" at the FHFA. The fast track to do this is to simply release the twins.
Didn't you sell your commons at 85 cents? And now you want to get back in at $1.25?
In my opinion, the conspicuously frequent calls for a release of late indicate that the Biden administration is indeed preparing the political groundwork for a release.
However, if the release is "Lockhart-style" - Lockhart pushed through the HERA gag law in 2007/8 - we will once again be served a "solution" that will be great for Fannie & Freddie (as corporations), the FHFA (as a "bureaucrat enrichment agency"), and "the public it serves", but - as in 2008 and 2012 - will end up as a slap in the face for shareholders who still hope for a shred of decency and constitutional fidelity.
This also applies to Freddie JPS (like FMCKJ).
“If something cannot go on forever, it will stop.”
(Stein's law)
Yes, "GSE to da moon". Unfortunately, their stocks have remained earthbound so far. Perhaps the shares will finally go into orbit when the inertial mass at the FHFA is reduced (exit from conservatorship, firing of 1000 redundant, grossly overpaid employees).
- FNMAT set 52 week high @ 3.20 in the last half hour of trading.
I agree. The jury's decision - while legally not directly related to HERA, the SPSPA, and the NWS - could tip the scales in favor of a political solution, i.e. a solution to amend the SPSPA to write off all or part of the SPS.
The jury's decision could therefore have political repercussions that go far beyond its long and widely discussed legal scope, which is certainly very limited.