Tuesday, May 14, 2024 7:29:22 PM
It's just the truth. I have heard the "common shareholders are the true owners of the companies" moralizing bullshit line so many times that it was worth putting things in stark terms.
The statement I made that you quoted is a fact in the present. There is no "time will tell" aspect because it isn't a statement about the future.
None of these things has to do with economic and voting rights, which is what the existing common shares lack right now. Ownership implies both control of decision-making and rights to profits. I didn't say the common shareholders have no rights whatsoever, I said that they don't have any ownership rights.
Not without running FnF through receivership and transferring their charters to newcos. This is fully half of my investment thesis in the juniors.
All of the Fifth Amendment takings cases over the NWS and original SPSPAs/conservatorships have been dismissed. A few are on their last legs having hail-Mary appeals outstanding, but it's hard to see any of them even getting to trial let alone winning.
If "the leader of the free world" looks to the court system to define what is and is not illegal and constitutional, which is the purpose of the judicial branch, he will find that the NWS, conservatorships, and original SPSPAs were perfectly fine from a Fifth Amendment standpoint given that all the takings lawsuits were dismissed.
If you're counting on future Fifth Amendment takings claims to either prevent future government actions like a senior-to-common conversion, or remunerate shareholders for those actions, keep your expectations extremely tempered. One long-standing Supreme Court precedent is that takings awards are based only on what the property owner lost, not on what the government gained. Right now the shareholders have no economic rights and only a couple of billion dollars of provable value (market cap: share float times market price per share).
As I explained in another reply, it isn't reasonable to expect that shareholders could even bring to trial (i.e. not get dismissed), let alone win, an implied covenant case against the companies in the event of a senior-to-common conversion given that reasonable shareholder expectations as of the date of the conversion have to include the LP ratchets in the letter agreements, which prevent the common shares from gaining any economic value.
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