Paulson puts out comments on F&F this month

[skibrian]

Mnuchin has a few million in this fund.  I think that hurts us because enriching paulson could look bad optically, even if it the RIGHT THING TO DO!

http://www.schroders.com/getfunddocument?oid=1.9.2241573

The fund was up in February, primarily from our positions in the pharma sector, which announced strong Q4

earnings and 2017 guidance. However, gains in the pharma portfolio were somewhat offset by losses in Fannie

Mae and Freddie Mac after a disappointing court verdict in one of the outstanding cases.

Our strongest performance drivers were Mylan, whose stock rallied 10% after reporting Q4 revenue up 31%

year-on-year (YoY) and adjusted EPS up 29% YoY. Full year 2016 results showed total revenue up 18% vs 2015

and adjusted EPS up 14%. Mylan also reported strong demand for drugs acquired through last year's $7.2bn

acquisition of Meda; a deal we viewed as very accretive. Shire's stock was up 8% after reporting strong 2016

earnings, up 12% YoY, along with revenue up 78% following the successful integration of the US blood disease

specialist Baxalta, which Shire acquired for $32bn.

Another strong performer was Allergan which also reported strong numbers. Q4 revenue was up 7% YoY and

overall 2016 revenue was up 15% YoY. Q4 adjusted EPS rose 16% YoY and 2017 guidance exceeded most

analyst projections. Allergan's stock rose 12% in February and 17% year to date. Despite the political noise

surrounding drug pricing, the companies we own continue to show that they are fundamentally sound, are

continuing to perform strongly and have diversified and global businesses that are not reliant on aggressive price

increases. We believe the major catalyst going forward will be the repealing and replacing of "Obamacare" which

will likely contain a deal with the industry to address the situation. Once there is more clarity and investors are able

to analyse the impact on the industry, valuations will normalise.

In the announced deals portfolio there were gains in Actelion/Johnson & Johnson, Syngenta/Chemchina,

NXP/Qualcomm and Time Warner/AT&T during February. We continue to see large deal volumes and are putting

capital to work where we find attractive risk adjusted spreads.

Fannie Mae and Freddie Mac were the largest detractors. This came after a federal appeals court upheld a ruling

that barred investors from suing to overturn the US government's 2012 decision to change the bailout terms to the

"net worth sweep" of all profits generated. Whilst the development is a setback and disappointing, we never based

our analysis on the court cases. In February, Treasury Secretary Steven Mnuchin reiterated his commitment to

housing reform and ending government ownership of the two companies. Despite the volatility, we believe there is

considerable upside to our holdings and a high probability of a resolution before the end of 2017.

Global M&A activity continued to be robust in February. Kraft Heinz made a $143bn takeover bid for Un

[skibrian]

[G. Buckman]

Thanks Ski - I like the sounds of this....

[SimSla]

There will be outcries regardless of the timing. Even if they reverse the sweep 10 years from now the fellow travelers will cry bloody murder. So they might as well get it over with this year.

[seysmont]

I know, right? There is going to be screeching no matter what is done. And it will be from the same people. The problem we have is we don't know why they absolutely require $0 equity. It's essential too. They can't be legally short that much. So it's either an illegal short or they want shareholders never getting any records. They don't want shareholders/owners period. That should raise questions if either is the case.

[SimSla]

First they do not want shareholders to get any records. That is well defined fact considering all the legal wrangling. The reason the equity goes to 0 in 2018 is because they want them dead. One of the reasons they want them dead is so nobody can see what happened during the financial crisis. If the companies are closed nobody can get the records i think but could be wrong. They used the companies for "stealth bailout" of all the banks. Watch Larry Summers lecture at Princeton. Most people believe or are led to believe that the crisis happened all of a sudden and nobody foresaw it. When i was on Wall Street I had a friend working in securitization who in 2007 told me that they know everything was going to go south. They just didn't know when. The government was knee deep in this. That is why no bankers went to jail.

[skibrian]

SIM

Tomorrow, after I watch basketball tonight, I'll tell you when I knew it was going south...and it ain't pretty. Hint, light bulb went on during a conversation at a volunteer event in 2007 with a retail mortgage broker....I'll even share my infamous stick figure presentation.

Good to have you here, fellow traveler in finance.

[skibrian]

Also...another note...trump admin getting pretty pissed off about this spying after the election. I was so doubtful, but apparently NSA about to provide the goods that Obama admin broke the law.

Maybe trump will want to use the sweep cover up as yet another way to sell revenge and highlight corruption in Obama administration. (Note to Obama lovers, no holy war here, there are various degrees of corruption in every admin IMHO)

suffice to day, it looks like he's out for blood, and I might suggest that the f&f sweep could put yet more pelts on the wall.

But I'm not sure the media gives a shit. They are so far from the last couple months...tweets, Brexit, confirmation hearings, supreme court, healthcare bill, lies, exaggerations, resignations, I've never seen such chaos in news. F&f would be a lead story before the second Iraq war. My how times have changed.

[skibrian]

Typo...media...'they are so FAT' damn phone...

[SimSla]

Skibrian you made me laugh. I immediately remembered the "Big Short" when the guys were at the strip club

[skibrian]

I saw big short...But forget strip club details.

FYI, best wall street movie ever made is margin call if you haven't seen it. Very not funny....

My stick figures tomorrow? Very funny

[SimSla]

I can't wait to hear. At the strip club the lady was explaining how she has multiple condos and that she was not alone. That is when the light bulb lit.

[skibrian]

Ahh...mine is more simple, and frankly, more painful. At least the stripper thought she knew what She was doing. My story was a broker unknowingly fucking his clients

[seysmont]

Obamacare is what NWS is feeding. We know the money goes to Obamacare among other things, because it is not controlled by the Congress. Repeal or let it die is an option for the republicans who oppose Ryancare. The moderates are afraid of voters losing insurance because of them, but they are afraid of the right wing demands too. I say Ryancare dies tomorrow. The Congress never delivers what the market expects, or maybe the market pressure doesn't work on these people. So Obamacare being choked is the cover. Trump keeps insisting it will die a horrible death if they don't do something. I just am curious who are the RE companies that hold this pile of Obamacare policies with no subsidies. 

[skibrian]

so simsla:

I was volunteering at a Saturday morning registration and boarding of a bus for kids leaving to go to a camp run by the american cancer society.  they were of course all suffering.  sad and fun at the same time.

So, before the kids arrive I engage in the usual chit chat with strangers.  "What do you do?"  "I'm an independent mortgage banker"  [let's call them small fry brokers, the just pass people down the chain and don't do any work or underwriting]

Anyway, he was telling me about this wonderful product in 2007.  I can't remember the name, but basically he said it would prevent people from ever losing their house if they stumble in the job market or have unexpected financial expenses.  Basically, they could skip payments, and the interest would just be added to the principal.  when they have the means again, they can just start paying the mortgage again.

ummm...very bad idea.  I was gobsmacked.  If only I weren't running a software company at the time and knew how to trade on that information.  Also, I had no idea how bad it would really get.

Stick figure presentation attached.  It arrived in my email in 2008 when I was an investment banker.  Somebody I knew in NY was passing it around.

[joseph slechta]

I think that it is huge that he wrote what he did.

Not a recco