Charlie Rose and Dem Senator....Mnuchin at WH dinner

[skibrian]

So, last night's Charlie Rose had a Dem WV Senator reporting on budget and tax discussion at a private WH dinner with half a dozen bi-partisan Senators.  The only cabinet member in the room was Treasury.  GSE's not mentioned in the segment.  But, it must have been an elephant in the room.

I wish Corker was there...it would explain today's pop!  And we would know the news is positive because of his insider trading past!

the video is available for free on PBS online.  I watched on my DVR, so I didn't go get the link for you guys.

[Europegoodold]

The message of the recent days with debt ceiling, dreamers etc. is: an agreement is possible...and it might include F&F rather sooner than later.
Refreshing: :-)
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1?bypass=true&ltr=1

[Letgoofmyfannie]

FNMAnifest Destiny :)

[Brandi Baloni]

If everyone would get on twitter and go ballistic with #backdividends #fanniegate #hermes #prada, I think an algo could pick it up and send it to the moon.

Seriously feels like I am trading against machines with no brains sometimes.

We need Frank Fosco and Chris Dominator to come back with the pump!

Come hither all ye goobers!

[joseph s]

I think absurd trader should come back and talk to us about his short position and why it is still going to work! He should be working overtime to protect his short!

[skibrian]

The calm AT told me in Washington that his main hesitation was that it would take too long and he was holding dead money until it was resolved.  That's, what, 3 years ago now since the last I.U. fly-in?  He was right.

He also told me he didn't want to sell in case the news came out and he didn't hold the shares once resolved.  Methinks the odds have been improved and he should think about buying.

Note to all:  preferred won't go to par right away because of the time value of money.  they will lag par for as long as they are in capital re-build phase.  The only way we get there faster is if the final agreement is to treat all excess NWS dividends as a Sr. Preferred pay down.  I'm not sure if this happens or not.

With all this uncertainty, well, fuck if I know what happens to common stock.  It will have value, I don't know how much.

[seysmont]

They did specifically state that Sr Pfds are paid off. This is Moelis plan, that for some reason doesn't get priced by the market still. I don't get it.

[Brandi Baloni]

In the long run, we are all Dan Gannon and Bruce Thompson. No shit, Good guys.

Something tells me that Dan Gannon is somewhere up there pulling for you guys!

Takes somebody with a big gas tank to stick this one out- or the discipline to get in and out.

I think Dan was the guy that liked to compare this situation to the plight of Native Americans, and he was in the process of building a bunker when he died!

---

Daniel Gregg Gannon Memorial

[Duncan Macleod "Beta"]

seysmont- so the question left is when moelis plan pays off pfds. - for skis time value

IF less than 12 months, 6 months 3 months.  we get closer n closer to redemption- 

I know you are aware of this.  Just confirming where both your's and ski's points come together. 

not sure if we need con gress realistically implement Moelis/Utility.  Can be done with just executive i think, but pragmatically we will see.

eitehr way some clarity on "the Plan" is what is needed to get even the time value.

[seysmont]

$100B number and recap are hallmarks of Moelis plan. 

Moelis converts pfds at par to common, so there is convert arb. It's very similar to M&A arb. There is a risk premium to conversion instead of a discount. So yous, the preferreds will be sub-par, but they will be under par by that risk premium, and it's not 20 cents on the dollar like they trade at now. The conversion price is floating on the common, so it's not a trivial hedge. I believe it implied first building some capital, then converting, because that is the moment where the first raise is going to happen. I also assume some rights will be offered. But even though the common conversion price floats, preferreds would be under par by the risk premium. Right now they are still trading as if the divvy makes a difference, and its odd.

[joseph s]

What!!! Why are we talking about Moelis? That plan is just #!$@!#/ for those greedy people.

They dont deserve dividends! Chop their heads off!

[Duncan Macleod "Beta"]

Seysmont - i dont undersatnd your or anyones conversion plan other than that i get some number of commons. in my illustration below, if i am clear enough tell me where i went wrong

my $50 fmcco pfd.  current pps irrelevant

Redemption value $50

Freddie common say $5.00 

1 fmcco= 10 shares of common no cash no dividend or div premium.

variations some div preference say 7% fmcco 8.75 for fmckj very little for the variable pfds (maybe even discount)

"Risk Discount" what risk. eventual redemption or not getting the dividend? but lets say 20%

$50 times 80% = $40 = 8 shares of common

or- i have seen post about 3 to 1 (for $25pfd) so my $50 fmcco gets 6 commons per 1 pfd share estimated value 3 times and depending on currnt pps of common say $5fmcc then = $15 worth of commons?

[seysmont]

The conversion will occur at whatever price will be determined in the future at par. So whatever price they come up with (could be some close or some moving average of VWAP) will determine how many shares you get for preferred to make it par. That's how I understand Moelis plan. They expect the common to be at $8, which is around 3-1 conversion on 25s. It's $25 par divided by whatever the conversion price is, and it tells you number of shares. Or $50 par, which is just double 25 conversion ratio. The $8 is the price Moelis expects the common to trade at at conversion. That would set conversion rate. Early on there is no conversion ratio. But it doesn't matter now, because the preferreds are trading under any conversion assumption anyway. 

[littlede...@gmail.com]

Click....shhh....sitback...relax and have a coca cola while looking at all da greens.....go figure...devil

[littlede...@gmail.com]

Net zero is not priced in because it is not the reality. They priced in net zero Once then lamberth..... Once a reality, we see da ....BANG>>>>>ZOOOOM>>>>>TO DA MOOOOOOON.....go figure....devil

[littlede...@gmail.com]

Beta....conversions are usually RV compared to market so, you are correct.

On the play, forget the divvy rate....buy RV or cheapest 50s. 25s are at a premium. The divy rate does not compared to maximizing RV at the end...that is,why you buy cheapies or value.

In theory, the lower the common pps, the better for preferreds in a conversion. But, let's not talk about that....go figure...devil

[littlede...@gmail.com]

Skibri...i disagree with AT....fnf is/was not dead money and never was....a goober would trade fnf....i made 3500% plus trading fnf...that includes the lambert give back....its dead money if you are AT.....go figure....devil

[ron...@comcast.net]

Today was the day to buy those rarely traded fifties on the cheap. Fnmfo was a bargain opportunity too.

Always curious who sold on big days. Not so much with commons but pfds where there's less trading and more investing.

[littlede...@gmail.com]

I started selling all my PREFERREDS around 18ish and was out by 21 and change...at one point I was totally out of fnf and had no shares. There was a rumor going around that I sold out which was true. I eventually bought back in. I no longer have my coveted .40 preferred shares. Those are all gone...my new basis is like 10ish-11 for 50s. But hey it's all good..10% of my holdings is commons so, I am good on both ends....go figure....devil

[littlede...@gmail.com]

Remember the climb to the 20s, those were the days...it was like bitcoin going to it's high. It was crazy monies....we even had a millionaires list on who crossed it for old timers lol....rememver that? Geez...that time will come again goobers....i have no doubt....go figure....devil

[dgj...@gmail.com]

good. UST gets $400b+? for saying they paid "bailout funds" (which they never did) and the commons go from $60 to $5. Preferreds go for less than liquidation...why would any long shareholder want this? Why would any other shareholder want this? Please educate me.

[Letgoofmyfannie]

The beatings will continue until our morale improves...

[littlede...@gmail.com]

Why?.....beeeep beep... dats why goober....nuff said....go figure....devil

[chrise...@gmail.com]

I disagree mightily with Seysmont & LD.

The conversion price will not be $8 because that is the going price nor is it beneficial for pfds to have a lower common. No, the conversion prices were suggested and will be intended to be locked down. We know that 'evil' (ha) HF will push the common PPS down to get a better conversion, right? (half-serious only)

No, there will be a conversion and the BOD must be very careful here to not be too lavish for preferred or punitive on common.

I am sure this is their business and they have done this maneuver before, but once the numbers start flying and $ is on the table, there will be lots of 'discussion' (some heated).

Is it $8, $10, $12.00 or $12.50? (I don't seeing it being higher than that, just my opinion) Heck, it could be $25 (ask the common and they'll tell you $50 or $100!)

FWIW, I think there is plenty to go around, and would rather it be more fair $11, $12 or so. This puts us all in about a 4 to 5x position, depending on 'cheapie' 50 or liquid FNMAS, FMCKJ.

GL

[Duncan Macleod "Beta"]

my solution is to convert to Cumulative preferred. at market Rate for cumulative pfds.  But no one is listening to me.  i go even further and say PIK dividends if the reserves are not high enough this keeps liquidity and solvency.  I would go even further and raise new monies with PIK cumulative pfds.  easier to raise money with a guaranteed return with a company and structurally sound as it prerserves cash in slow times. 

[littlede...@gmail.com]

Well, I don't know what the conversion is but, I know I am getting RVs worth for my Preferreds.  The commons will be fine.  The commons is currently at 2.73 for FMCC.  There is weird thing here.  In a normal world, Cs, 25s, 50s ARE FAIRLY priced given the situation we are in with the NWS priced in.  The odd thing is we all know this is likely a restructure coming and a conversion is likely to come.  With that said, we have to invest with 2 mindsets.  One is to maximize return in the long run and the other is to maximize return for the shorter/midterm timeframes.  I am not sure, if I am making sense verbally but, that is my mindset.  

When you look at the Ps, that is pretty standard and you dont even have to think about it much.  Ps are safer and will get RV in value.   Ps are a GREAT PLAY

Cs are a Good Play.....  Cs are great for the shorter/midterm play i.e trading.  There is no dispute because Cs can move1-3-5% easy on a good day and 10% plus on some great days.  Ps on the other hand, the big boys are holding like its gold.  No one is selling at these levels.  There is no volume in Ps.   If I am a buyer right now, I will try to pick up Ps at below this range but will buy Commons hands down because I do think Conversion is around 5-8 dollars for commons.  So, anywhere below 4.80 is a buy for me for fmcc.  I bought some share at 2.40.  I am buying very selectively but do want to buy in bigtime.  My only hesitation are the courts.  They seem to disappoint everytime with the NWS decisions.  But, I do think no matter what happens with the NWS win or lose a conversion is coming to the utility model.

With that said, The amendment to our suit is the next battleground.  If we can amend it, PPS are going up ala my 2.40 adds and smaller adds when I get a chance.  If we lose the amendment, give up on the NWS fight and go solely on the conversion end game play and load the boat on preferreds the day the judge denies the amendment.  But, lets hope we can get a favorable outcome with the amendment.  If it is a favorable outcome, expect Ps and Cs to go up and expect 5-8 range for Cs.  That is f'en awesome.  Going from 2.73 to 8?  If Catbird is still bitter on that?  The goober have ultimate greed issues.  

If we get a favorable outcome on the amendment, everything will be fair even if they exercise the warrants which they will.  I am in favor or the moelis or a moelis like plan.  It is good.  Its not perfect but its good.  The perfect scenario is RECAP AND RELEASE.  I and the P holders are for that.  But, lets me real as this play is coming to an end and maximize this few once in a life time chance of making monies.  That is the roadmap, so there are ways to make monies on any scenario or make monies after monies on top of monies and more monies.  That still wont be enough for people with ultimate greed issues but, those goobers should know....ROME WAS NOT BUILT IN A DAY!......The gains add up if you book them over a years time....trust da devil....book the 2%-3% plays.  10 of those plays  is how much?  No joke, I booked 47.50 on a 40000 trade before.  Luckily, I dont pay commission. 2-3% gains on the big boards is really good for a trade.  We seem to lose a track of reality here with our baggers.....

to end this and start the weekend, Recap and Release will mean Ps will start to get divies again on top of Preferreds status which all P holders should be for. So, there is no argument here and dont buy into the jive that Ps are against that.  But, that is not likely to happen.   On the PPS route, no matter what your estimates are......you have to keep in mind, that it is wishful thinking if it is not within a reasonable % of the Ps RV.  8 reasonable.  12.50 is the max and unlikely at 2-1 against 25s.  If you are a trader....aim at the 8 being max to be safe.....5-8 is a good range.....go figure...devil

 

[seysmont]

It's a weird situation now. On one hand today is worse than yesterday because Mnuchin denies end of NWS in Sept, on the other hand, risk went away with pols changing stance. That wasn't nearly priced in. So incrementally bad news on risk repricing. Weird that people dropped the stocks. 

[seysmont]

Actually I don't think we convert at $10. Conversion is needed to clear the slate for the capital raise. With that, there has to be easy money for people buying the secondary, and $10 is easy money, so the conversion will be priced under $10 for some spread. There is a liquidity discount due to the size of the offering, so people will get in for an easy pop, and that offering price will pretty much be a conversion price or close, so I would not count on a high conversion price. My gut feeling is they go to low $20s after everything is said and done. Ackman did a good job with GGP, so something like that is coming here. It's just so long in the tooth, it's silly. I think it has to do with unprecedented size of the situation. The enterprises are tremendously profitable, and the raise needed is also tremendous. 

[joseph s]

Yup devil. Greedy common holders expecting a huge payday and saying they were "robbed". Let me clue everyone in(yes we all know this) if the cship is theft and fraud, pref are owed divvies from sept. '08 on. Fact of the matter is, it aint going to happen.

Just like warrant cancellation aint gonna happen.

Not a recco

[seysmont]

I would say you can't count on damages and justice as people generally understand it. It doesn't mean it will not happen. It's just unreasonable to expect it. It is reasonable to expect the current regime to stop, in fact it's most likely coming to an end soon. Well capitalized players will not push for the total vindication after they get what they want. So it's unlikely to result in anything. It doesn't mean there is no chance it can't happen. I just think if something comes out of it, we will wish we are out of the country, because it will not happen under the current regime.

[Brandi Baloni]

 If you ain't all in on commons and holding on for dear life, then you ain't shit!

[joseph s]

This cat will land on his feet....

[seysmont]

The commons are more expensive than crappy $50s by a lot. 

[joseph s]

Yeah. But I agree w several that the common can be traded