Replies to post #778002 on Fannie Mae-No Politics (FNMA)

[Stern is Bald]

All we have a soc acct here just created today... Probably just a BS'er

[bradford86]

"f seeing a significantly larger paying from the trial settlement thanks to the interest payment"

your definition of "significantly larger" is my definition of insigificant --- unless you're assuming in your mental model that the damages model gets appealed and reliance damages are permitted in this case.

i hold no commons. i generally see them as having no intrinsic value.

i am not selling freddies for fannies.

i'm mostly freddie mac preferreds.

i generally see owning commons as an indicator of not understanding the mechanics or priorities of how this equity restructuring can be expected to play through.

to be completely oblivious to the ominous continuing to balloon spspa liq pref.. is a privilege afforded to common shareholders

it's like walking around outside like it's a calm sunny day when i look outside and see it is a tornado / hurricane conditions

[nagoya1]

Hey buddy, you just showed up to the gse pref blowout malarkey.
Go back about 100 000 posts to get up to speed before having any pov.
Fnma

[trunkmonk]

I've got about a 1:1 ratio P to C so I am more heavily skewed toward preferreds simply because of my risk intolerance and (potentially wrong) assumption that P are less risky.

im thinking u need to rethink.

[FFFacts]

I have said for years if/when the time comes for a capital raise legacy commons will receive a rights offering which will be valuable. Marj this post and my previous ones.
As far as complimenting the fake commander you shouldn't. That dude used to be a moderator until he rightfully got booted trying to silence everyone thar criticized his whacky posts.

[kthomp19]

P and Cs are all gonna get paid there is no question in my mind there its just a matter of when. I think you could argue that there is a chance that massive dilution takes place which is an incredibly low chance similar to that of all equity shareholders getting canceled.

Much of the bickering is due to the fact that not everyone agrees with this opinion.

I think there is a pretty high chance of massive dilution via a senior-to-common conversion (like with AIG, Citi, and Ally), for example.

I do think it could be worthwhile for common holders to carry at least par value worth of Ps equivalent to their $$$ holdings in Cs which would mean splitting your portfolio roughly 6-7% P and 93/94% C to hedge that specific risk, but of course it isn't necessary.

Bill Ackman is about 85% common/15% juniors at the moment for what it's worth.

Also, Treasury's equal haircut offer means that if there is a senior-to-common conversion, the juniors will end up taking a haircut to par. That means the hedging % for common holders should be higher. Ackman might be right in the sweet spot after all.

Bradford/other Freddie preferred holders: Are any of you considering selling your Freddie Ps and swapping to Fannie with the hope of seeing a significantly larger paying from the trial settlement thanks to the interest payment? Also, I am interested if you all hold commons at all?

1) I am actually swapping most of my Fannie juniors for Freddie because I think the Fannie vs Freddie spread on the juniors will revert back to its long term average of about 6%. I know that the jury trial grants pre-judgment interest Fannie juniors and not Freddie, but I expect both sides to appeal and there could be an entirely new damages trial. The appeals court could also choose to add pre-judgment interest for Freddie after all, which would make FMCKJ a better hold than FNMAS (at current prices).
2) I currently have a long FNMAO/short FNMA pair trade on, but since the FNMAO side has gone up around 20% (I bought a bit above $3.00) while FNMA is only slightly up from my entry point ($0.71) I will likely close out both legs soon.