JSmith5
7 시간 전
Calling his price "conservative" means that you think somehow things are likely going to be better for legacy common holders than this. Do you really expect Treasury to have less than 71% of the common in the end, or for the P/E multiple to be greater than 15?
Yeah - I hear you. All these price predictions are just fun speculation. Any of them are possible. And its good to hear other people's theory of the possible. I still contend that $40 or so would not be unreasonable as I have explained in several posts. But a lot of assumptions on my part (also I would like to mention that I believe the utility Duke Energy had a P/E of 19 last I checked).
That being said, I do want to note that Paulson was among the rich folks at the Inauguration and was sitting with folks like Musk and Bezos. He was in the box seats and House members had to sit in the bleachers. So that bodes well for preferred. However, Trump did not sign the EO I submitted freeing the GSEs - at least at the rally. Maybe he is doing this as we speak (or as I type). I am going to bed early tonight as we are still trying to catch up on our sleep because of the fireworks the other night at Trump National and our dog (named "Freddie" of course, as he is a boy - otherwise it would have been "Fannie" as he was, as were the GSEs, supposedly, "rescued") still won't come out from under the bed. So maybe I will see where he signed our EO in the Post tomorrow.
Nats
trunkmonk
7 시간 전
They are very scared tonight, GSE doing very well. almost never do they post in the evening, almost exclusively after a run up intraday, and it started to top, they pounce as if it has anything to do with their remarks, remarkable anyone thinks that highly of herself, what a lardo.
detearing
8 시간 전
Understanding the Relationship Between FNMA and FNM
To analyze whether FNM (the stock traded on the Berlin Stock Exchange) follows the volatility of FNMA (the stock traded on the OTC market), we need to consider several factors, including market dynamics, trading environments, and the nature of both exchanges.
1. Overview of FNMA and FNM
FNMA, or the Federal National Mortgage Association, is a government-sponsored enterprise (GSE) in the United States that provides liquidity to the mortgage market. It trades primarily on over-the-counter (OTC) markets, which are less regulated than traditional exchanges. This can lead to higher volatility due to lower trading volumes and less stringent reporting requirements.
FNM represents FNMA’s shares traded on the Berlin Stock Exchange. The Berlin Stock Exchange is part of a larger network of European exchanges and operates under different regulations compared to U.S. markets. Generally, European exchanges may have more stringent listing requirements and regulatory oversight than OTC markets.
2. Volatility Factors
Volatility in stock prices can be influenced by various factors:
Market Sentiment: Both FNMA and FNM are subject to investor sentiment regarding U.S. housing markets, interest rates, and economic conditions.
Liquidity: OTC stocks like FNMA may experience greater price swings due to lower liquidity compared to stocks listed on major exchanges like the Berlin Stock Exchange.
Regulatory Environment: The regulatory framework governing trading practices can impact volatility. The Berlin Stock Exchange has stricter regulations that may contribute to more stable trading conditions for FNM.
3. Correlation Between FNMA and FNM
While both stocks represent ownership in the same underlying entity (FNMA), their price movements may not always align perfectly due to:
Currency Fluctuations: FNM is priced in euros while FNMA is priced in U.S. dollars. Changes in exchange rates can affect how investors perceive value between these two listings.
Market Conditions: Different market conditions in Europe versus the U.S. can lead to divergent price movements even if they are fundamentally linked.
Trading Hours: The trading hours for each exchange differ, which means that news affecting FNMA could impact its price before it affects FNM.
4. Conclusion: Volatility Comparison
In conclusion, while there is likely some correlation between FNMA’s volatility on the OTC market and FNM’s performance on the Berlin Stock Exchange due to their connection as representations of the same company, several factors suggest that FNM may exhibit more stability compared to FNMA. This stability arises from stricter regulations and potentially higher liquidity associated with European exchanges.
Thus, it can be said that FNM does not strictly follow the volatility of FNMA; rather, it tends to exhibit more stability due to its trading environment on a regulated exchange.
kthomp19
8 시간 전
That's not at all what my sarcastic list of reasons means.
Step back through the thread here.
You: "And a lack of lawsuits can be for many reasons, not just a lack of confidence in the argument. Again, your opinions are not facts! Maybe I'm out of the country, maybe I'm agoraphobic and can't leave my house, maybe I have no money, maybe I'm wanted for multiple felonies and need to stay incognito... Or maybe, just maybe... I just don't feel like it because it's a waste of time and has no bearing on the money I'll make on this stock?"
Me: "All I see is a list of weak excuses."
You: "Of course that's what you see!! LOL! 🤣 The sarcasm is completely wasted on you!"
Me: "If what you had said was sarcastic, that implies that you agree with my assertion that you not having filed a lawsuit yet means you aren't all that confident in your legal theory."
My last comment stands. Keep backpedaling if you like, but it won't do you any good.
Just because someone hypothesizes that something is illegal and/or subject to a potential legal or contractual challenge or correction in the future does not mean they need to file a lawsuit.
Of course not. There's always the third unspoken option. It's also different if it's one or two offhand comments that aren't pursued, compared to constant and incessant harping about it like Rodney does.
How many logical holes do I have to poke in your posts for you to see it?
It would take you actually succeeding in doing so to find out.
Put it to a vote of the board
The argumentum ad populum logical fallacy in its purest form. Copernicus is turning over in his grave.
kthomp19
8 시간 전
Oh so now there's uncertainty?
:earth: :astronaut: :gun: :astronaut:
You seemed pretty darn certain there was only one probable outcome - SPS LP Cramdown to Common.
I am "certain" that one thing is "probable"? I suppose you could word it that way, though the same applies to you.
To be specific, I said in the past that I thought there was a 75% chance of a senior-to-common conversion, and I upped that to 85% upon hearing John Paulson say on two different occasions that he expects Treasury's common ownership to be at least 90%.
What happened to - "Treasury thinks" it's illegal to write down the SPS, so that is not a viable path. Even if it's not illegal, that doesn't matter, because as long as they think it's illegal, they will act accordingly. Do you still think Treasury thinks it's illegal???
I guess you want to revisit this topic after all?
I used the quotes from Calabria's book to help form my 75% estimate, though it was the Supreme Court's Collins ruling that was (and still is) the primary reason I think a senior-to-common conversion is much more probable than a writedown. Even those quotes have been bumped down the list recently by John Paulson's comments.
Or maybe you can agree with my hypothesis that the PERSON who is in charge is more important than what someone said in a book quote in 2019?
No, I don't agree with this one. When it comes to specifically talking about the legality of a senior pref writedown, I don't think the personal opinion of the Treasury Secretary is relevant. It's the job of the DOJ to advise on things like this; they are the ones who represented Treasury in all the cases that had Treasury as a defendant.
Or - the AIG blue print says Treasury will take at least 92% because they had a fiduciary duty to shareholders, where they have none with GSEs so they will likely take MORE than 92%. Do you still think it's more likely that they will convert and take greater than 92% of the equity. Just so they can pad the Treasury with 15% more value than the warrants alone, because to do otherwise would be charity.
I'm glad you're keeping up with my arguments, and at least this time actually reporting them faithfully. I can see arguments for Treasury stopping at 90% or going all the way to 99%, but John Paulson's comments of 90-95% lead me to believe that going beyond 95% isn't all that likely.
Or - the government does not fear any lawsuits? So if 47 wants to get this done in a timely manner to add to his legacy, you don't see a few years tied up in the courts as something to avoid? You still think potential lawsuits are not a problem?
I don't think the threat of lawsuits will stop Treasury from either converting the seniors to commons or stopping at any given percentage of the companies. Injunctive relief claims would run smack into the 4617(f) bar, and takings/illegal exaction claims could only result in money damages being paid to legacy common shareholders later (they wouldn't undo the dilution and thus wouldn't hold up the release process).
If you have any other theories for potential lawsuits over a senior-to-common conversion that don't involve either takings/illegal exaction claims or injunctive relief, I might be willing to make a one-time exception to my first signature line. 😉
Ironically, you seem to be discounting the possibility that some person or group (I'm thinking of the Zandi/Parrott/Bright types) might file a lawsuit against Treasury if they write off the seniors! Lawsuits gumming up the works is a double-edged sword.
Hate to say it, but the current trends point to what the rest of us have been saying for a while - It was Political will and optics of the economy that got the GSEs into this mess, and it will only take Political will and optics to get them out.
I agree with this, but what does that have to do with whether or not Treasury converts the seniors to commons?
kthomp19
8 시간 전
Because I've seen it and was part of it when I worked on the federal regulatory side--long before I joined Fannie in 1983--solid capital is whatever the regulator says it is.
In this case. acceptable capital is whatever the WH-Treasury (in that order)--and the regulator say it will be.
No. 12 USC 4612(a) says:
(a) Enterprises
For purposes of this subchapter, the minimum capital level for each enterprise shall be the sum of—
(1) 2.50 percent of the aggregate on-balance sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles;
(2) 0.45 percent of the unpaid principal balance of outstanding mortgage-backed securities and substantially equivalent instruments issued or guaranteed by the enterprise that are not included in paragraph (1); and
(3) 0.45 percent of other off-balance sheet obligations of the enterprise not included in paragraph (2) (excluding commitments in excess of 50 percent of the average dollar amount of the commitments outstanding each quarter over the preceding 4 quarters), except that the Director shall adjust such percentage to reflect differences in the credit risk of such obligations in relation to the instruments included in paragraph (2).
12 USC 4614(a)(1)(B) says:
(1) Adequately capitalizedAn enterprise shall be classified as adequately capitalized if the enterprise—
(A) maintains an amount of total capital that is equal to or exceeds the risk-based capital level established for the enterprise under section 4611 of this title; and
(B) maintains an amount of core capital that is equal to or exceeds the minimum capital level established for the enterprise under section 4612 of this title.
12 USC 4502(7) defines core capital:
(7) Core capitalThe term “core capital” means, with respect to an enterprise, the sum of the following (as determined in accordance with generally accepted accounting principles):
(A) The par or stated value of outstanding common stock.
(B) The par or stated value of outstanding perpetual, noncumulative preferred stock.
(C) Paid-in capital.
(D) Retained earnings.
The core capital of an enterprise shall not include any amounts that the enterprise could be required to pay, at the option of investors, to retire capital instruments.
The conclusion is crystal clear. In order for FnF to be classified as "adequately capitalized" outside of conservatorship, they must have core capital of at least 2.5% of balance sheet assets.
Neither Treasury nor the regulator (FHFA) can do anything about this. The only way to change the above conclusion is for Congress to change the law.
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