Questions Questions Questons!
Quote:
Short version: I think the juniors will end up with somewhere between 50% and 100% of par (stated) value via a conversion to common. Not converting the juniors makes no sense due to the CET1 capital requirement in the ERCF.
Answer:
I agree with you there. I don't see JPS getting 100%. But I do not understand how and why a write down from 100% due to a conversion when JPS holders have to vote on it and it clearly states in the contract ( non convertible) so either they change the contracts or offer JPS holders a carrot or cream pie or something! I really don't know how the Gov can wingle that one? Do you have any insight on what it might look like or offer JPS holders?
Quote:
I think the commons are worth about $8 at the most when FnF are recapped and released, and that's only if Treasury chooses to write down the seniors entirely. If they convert those seniors to commons instead, as Mark Calabria wants them to do and as KBW expects, they will be worth somewhere between $0.25 and $2.00 per share, depending on how FHFA and Treasury structure the transaction. Probably towards the lower end of that range since there is no reason for either FHFA or Treasury to fear any lawsuits and that the situation for FnF common shareholders is far worse than that of AIG common shareholders, who got diluted down to 8%.
Answer:
I agree with you there also. However $0.25 is on the very low end if the greedy Gov does convert everything however more likely between $.70 to $2.25. If they don't convert the warrants then yes maybe just maybe around $8 to $12.
Quote:
I expect the commons to rise and fall roughly in line with the juniors until recap/release time so I wouldn't short them, at least not for more than very short periods as an attempt at statistical arbitrage, but I avoid them entirely.
Answer:
It sure is going to be a rough ride ! Buckle up cup cake and hang on!!
Bullish
Retired at 47, Life's Good thanks to trading.......
