JSmith5
2 hours ago
We know everything
I think these are the 2 stocks - out of the universe of all stocks in all countries - where that would be tough to do.
These are a great speculative play - but it's the kind of play where so many unexpected things have happened in the past 16 years that it would be impossible to say with 100% confidence where this is going to end up. I would be real careful about recommending this to others as a sure thing. But I would not hesitate to recommend this as, what it is, a great speculative play - with a ton of risk and potentially great upside. These are full disclose, due diligence stocks in extremis. And we can't know what we don't know.
In my favorite line from the movie Animal House, the character Otter says to Flounder, "You can't spend your whole life worrying about your mistakes! You fd up... you trusted us!" I just want folks to avoid having to say this to their families and friends.
Nats
trunkmonk
6 hours ago
Interesting, KTCarneyCircus Clowns for years have been all over social media saying commons would fail, all the way up to $5, and they were so sure of themselves, they keep doing it. I guess if they stop it would be an admission they were always wrong and clueless about everything, including Ackman. Ouch. I guess someday someone will listen to the swollen medulla oblongata chantings, and make no money, no wonder they have no following, hide behind aliasโs and have no names, no good reputations, and made up fantasies that are based on facts out of context that are completely void of HERA, and lead to advice that make u broke. Iโll stick with Ackman.
Barron4664
8 hours ago
Thanks for the response. Im working on it. Takes time to do it right. I see again you refuse to address the argument made. APA is certainly not closed by Collins. In 16 years, no one has filed a lawsuit alleging dereliction of duty of the Director using the Charter Act, and SS Act of 1992. By the way, the APA claims I make apply to the Treasury as well. I haven't even mentioned the arbitrary agency action of the accounting standard by not defining what tempory is to avoid consolidation. Or the purchase of 200 billion of MBS on the open market using TARP funds in 2008. Collins case was soly about actions of the Agency acting as Conservator. As the Safety and Soundness act clearly says, the Director is not the Agency. Director has a statutory duty to ensure the charter acts and the Safety and Soundness Act are followed. Even if the GSE is run by the FHFA as conservator. HERA did not remove the safety and soundness duties of the Director in the S&S act. Your avoidance of the key elements of my arguments in your responses, suggests that you don't know how to debate these points. This is promising. You sure you don't want to join in the fight? Would love your help.
The Man With No Name
9 hours ago
John Paulson, a key Trump donor who turned down the Treasury Secretary job because of "complex financial investments" (widely understood to be his large FnF junior pref position), said that he expects Treasury to end up with 90-95% of FnF's common stock.
Exchanging the current juniors for commons adds $33B to CET1 capital in an instant at no cost to the companies. This is important because the CET1 capital requirement is one that FnF will have to meet in order to be classified as "adequately capitalized" by HERA outside of conservatorship.
Even at a market cap of $200B for Fannie Mae only, Treasury owning 90% of the common only leaves $20B for the juniors ($19B total face value) and legacy common. A full junior pref conversion leaves $1B behind for the common, or around 86 cents per share.
This goes down if the P/E at the time of pref exchange (senior, junior, or both) is imputed to be lower, or if capital needs to be raised, or if 90% isn't enough for Treasury.
An investment in the commons is highly risky, especially at current prices. Don't be blinded by huge price targets. Look at the incentives for the important players, consider what is probable (as opposed to what is merely possible), and tread carefully.
People would rather listen to talking heads and Ackman as he's more or less resorted to political pumping.
90-95% according to Paulson, which also means Paulson wouldn't doubt that he won't recover 100% on his preferreds. 86 cents would be a best case, grand slam outcome.
I'm not Paulson but my guess is Treasury at 92-93%, JPS with the rest sans some charity to legacy common.