Wednesday, June 09, 2021 11:33:59 PM
That happened under a different Presidential administration, with a different FHFA director and a different Treasury Secretary than the original SPSPAs.
The NWS absolutely was designed to facilitate the wind-down of FnF. But that does not in any way prove that the original SPSPAs were also designed for that purpose.
The same Tim Howard who said both that one cannot prove that FnF never needed the bailout and that Treasury did not in fact direct FnF to purchase toxic mortgages?
Ackman's talk about the warrants was nothing even close to "posturing". He owns the commons because he thinks Treasury's interests are aligned with the existing commons. If Treasury were to not exercise the warrants, Ackman would likely sell his entire position. Be careful what you wish for.
I agree. That's why Treasury will fully exercise the warrants before any capital raise.
The juniors are basically an out-of-the-money call spread, and the commons are call options struck at the upper end of that call spread. Buying juniors to hedge a common position makes perfect sense. Buying common to hedge a junior pref position doesn't.
But why would you care about this? Current junior pref holders selling some of their position to buy commons would only push up the price of the commons, making it more expensive for those who want to own commons to build their position. Therefore your call seems self-defeating.
By contrast, I want current common shareholders to hold on to their shares rather than selling them to buy juniors because I want to accumulate the juniors more cheaply.
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