Replies to post #518626 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Don't you think the fear factor Ackman referenced was the risk that some Corker-style receivership could find traction in some 11th hour coup?

That's certainly part of it, but legislation was always a long shot. Much longer than to justify a 38% allocation. It also became pretty obvious over the course of 2018 that the legislative path was closed, but Ackman bought most of his prefs in 2018.

I believe his entry into JPS was out of concern, just like I had, that Calabria would follow through on the Kill Bill to get the GSEs declared dead and buried.

We still can't rule that out. There are legal ways to reform the housing finance system while leaving current shareholders out in the cold. That's why I think the juniors still trade at around 1/3 of par, they have downside potential too. Any recap and release would see them go to at least 85% of par.

Do you have any proof that he EVER stated he feared Moelis would net a better JPS outcome

Um, no. Moelis is better for commons than prefs, why would Ackman fear it?

Thanks in advance for providing proof that your observation isn't just opportunistic "tweaking" to suit a pro-Moelis narrative.

As strange as it sounds, I'm not really pro-Moelis. I'm pro-juniors-going-to-par, no matter how they get there. And if they can go above par with a conversion, all the better. I just think that Moelis is better than the best case scenario for commons, so common shareholders arguing against it is incomprehensible to me. The very existence and publication of the Moelis plan tells me which way the wind is blowing.





It seems like so many posts I read start from the premise that the commons are worth $X (where X is 20, 50, 100, you name it) and just find ways to try and trash any plan that doesn't get them to that magic number. Then they come up with a plan that does get to that number, but ignores the incentives of those in charge. By contrast, I start with what makes sense to the major power brokers involved (FHFA and Treasury, a notch below that the secondary offering buyers, and a notch below that the lawsuit plaintiffs), and go from there.