GSO Presentation, 2014 runnoff scenarios, everybody makes monies robots!
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skibrian
May 3, 2017, 5:49:48 PM5/3/17
to Fannie and Freddie Preferreds and Commons Message Board
Jr preferred fully paid, common stock holders get 10 bagger.
but, this is three years old and the world is very different. anyway, enjoy. I wanted to give it its own thread so I could tag it.
but, this is three years old and the world is very different. anyway, enjoy. I wanted to give it its own thread so I could tag it.
skibrian
May 3, 2017, 5:58:00 PM5/3/17
to Fannie and Freddie Preferreds and Commons Message Board
If we wanted to discuss runoff, attached is the scenario Alvarez &
Marsal did for GSO Capital (a unit of Blackstone I believe)
Attached.
This is vinatge 2014
but it ain't happening.
it does show as of 2014, everyone gets paid, including some significant crumbs for common stock holders. Specifically, $61.4 billion for FNMA and $47.6 billion for Freddie Mac, after tax. These dollars would first be distributed to preferred stock holders, then common stock. let us assume the government says "ok, we got paid our principal back and 10% dividends, so we relent, you guys can have your companies back"
Fannie Mae:
http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2016/10k_2016.pdf
$61.4bn at liquidation
repay $19.13bn junior preferred at par, no dividends declared (the A&M report assumes zero cash distributions in the runoff)
$42.27bn left
1,158,082,750 shares outstanding
$36 per share
Freddie Mac:
http://www.freddiemac.com/investors/sec_filings/index.html
$47.6bn at liquidation
repay $14.109bn junior preferred at par, no dividends declared (the A&M report assumes zero cash distributions in the runoff)
$33.491bn left
650,046,828 shares outstanding
$51.5 per share
The companies are worth far less now, three years later. Capital has been slashed. Earnings are better. Any shock during the runoff would mean immediate BK.
This also assumes government demands no more payment on Senior preferred, and government does not exercise warrants. If they exercise, the per share price gets divided by 5, immediately.
The analysis by A&M also assumes no cash distribution for 10 years. So, you have to wait 10 years before you get one penny of that 10+ bagger. and risk an economic shock wipes you out in the meantime.
so there you go common stock holders, pray for a runoff! Hell, I'd take it too, but I wouldn't wait ten years for it. I'd sell out if this were the plan. The value of the shares will creep up the closer you get to year ten in anticipation of finally getting the hands on the cash.
Again, assumes the government decides to get out of the way. And assumes we don't need these companies anymore.
Anyway, we need these companies, so they aren't going away. They need capital to withstand a runoff over ten years. They don't have it.
Attached.
This is vinatge 2014
but it ain't happening.
it does show as of 2014, everyone gets paid, including some significant crumbs for common stock holders. Specifically, $61.4 billion for FNMA and $47.6 billion for Freddie Mac, after tax. These dollars would first be distributed to preferred stock holders, then common stock. let us assume the government says "ok, we got paid our principal back and 10% dividends, so we relent, you guys can have your companies back"
Fannie Mae:
http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2016/10k_2016.pdf
$61.4bn at liquidation
repay $19.13bn junior preferred at par, no dividends declared (the A&M report assumes zero cash distributions in the runoff)
$42.27bn left
1,158,082,750 shares outstanding
$36 per share
Freddie Mac:
http://www.freddiemac.com/investors/sec_filings/index.html
$47.6bn at liquidation
repay $14.109bn junior preferred at par, no dividends declared (the A&M report assumes zero cash distributions in the runoff)
$33.491bn left
650,046,828 shares outstanding
$51.5 per share
The companies are worth far less now, three years later. Capital has been slashed. Earnings are better. Any shock during the runoff would mean immediate BK.
This also assumes government demands no more payment on Senior preferred, and government does not exercise warrants. If they exercise, the per share price gets divided by 5, immediately.
The analysis by A&M also assumes no cash distribution for 10 years. So, you have to wait 10 years before you get one penny of that 10+ bagger. and risk an economic shock wipes you out in the meantime.
so there you go common stock holders, pray for a runoff! Hell, I'd take it too, but I wouldn't wait ten years for it. I'd sell out if this were the plan. The value of the shares will creep up the closer you get to year ten in anticipation of finally getting the hands on the cash.
Again, assumes the government decides to get out of the way. And assumes we don't need these companies anymore.
Anyway, we need these companies, so they aren't going away. They need capital to withstand a runoff over ten years. They don't have it.
skibrian
May 4, 2017, 1:36:24 PM5/4/17
to Fannie and Freddie Preferreds and Commons Message Board
@joseph...
my post here proves why Ackman wasn't dumb when he got the common stock.
he might end up misguided. This presentation was made on the assumption that the capital gutting of the companies would stop in 2014
my post here proves why Ackman wasn't dumb when he got the common stock.
he might end up misguided. This presentation was made on the assumption that the capital gutting of the companies would stop in 2014
skibrian
May 9, 2017, 11:27:59 AM5/9/17
to Fannie and Freddie Preferreds and Commons Message Board
bump...other board needs sanity
joseph s
May 9, 2017, 7:26:19 PM5/9/17
to Fannie and Freddie Preferreds and Commons Message Board
Lol. More people going to leave or get kicked off? To stay, just bash pref and pump common. Keep blinders on so you dont see the whole picture....
There is not going to be some push to destroy or help one or the other. Any capital raise hurts common. Whether more pref or more common. More common prob hurts less but they may raise both.
skibrian
May 24, 2017, 12:25:30 PM5/24/17
to Fannie and Freddie Preferreds and Commons Message Board
@wayne z:
Saw post on other board asking about how much preferred is out there at Par, so bumping this, I already put it out there. # of shares don't matter because not all the securities have the same par value:
Fannie Mae:
http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2016/10k_2016.pdf
Saw post on other board asking about how much preferred is out there at Par, so bumping this, I already put it out there. # of shares don't matter because not all the securities have the same par value:
Fannie Mae:
http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2016/10k_2016.pdf
repay $19.13bn junior preferred at par
littlede...@gmail.com
May 24, 2017, 5:25:52 PM5/24/17
to Fannie and Freddie Preferreds and Commons Message Board
Doesn't matter Da amount of Jr's...dey most likely will convert...dey ain't no no gonna redeem...dey ain't paying out cold hard goober cash...wez getting shares in F^2amco....go figure....devil
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