TightCoil
3 minutes ago
Shares of Fannie Mae FNMA-4.88%
and Freddie Mac FMCC-3.06% fell Monday after Keefe, Bruyette & Woods analysts downgraded the stocks to Underperform. Here's a look at the latest developments for the mortgage giants.
What To Know: The Keefe, Bruyette & Woods analysts, led by Tommy McJoynt, said that though the odds of a privatization attempt have grown lately, they see "considerable risk" to the stocks at their current levels. Shares of Fannie Mae and Freddie Mac are up 333% and 343%, respectively, since the day before the election of President Donald Trump.
The analysts increased the probability of the senior preferred shares being forgiven to 10% from 5%, but said they see a failed attempt at privatization or a successful privatization with dilution of senior preferred shares to common as more likely outcomes.
However, the firm did raise the price target for Fannie Mae from $3 to $4 and raised Freddie Mac from $4 to $4.50 based on the higher probability of forgiveness of the senior preferred shares.
What Else: Trump recently announced plans to nominate private equity CEO Bill Pulte as director of the Federal Housing Finance Agency (FHFA), which is expected to oversee efforts to return Fannie Mae and Freddie Mac to the private sector, according to Reuters.
FNMA, FMCC Price Action: According to Benzinga Pro, Fannie Mae shares closed Monday down 4.88% at $5.46 and Freddie Mac shares closed down 3.25% at $5.06.
JSmith5
23 minutes ago
he was told by Treasury that a senior pref writedown would be illegal. I surmise that Treasury was advised by DOJ on this matter and thus that opinion likely originated with the DOJ. Given what you know about the DOJ, do you think this is a reasonable inference? And would it being correct have any bearing on the likelihood we should assign to a senior pref writedown?
My guess would be that he was never given any formal opinion as he did not cite anything in writing (I have not read the book) - so its possible that it may have been some off-the-cuff remark from Treasury OGC. I doubt that it originated from DOJ but it could have. But so many people have discussed the possibility of a write off or writedown that I think if it was true that they could not do this - it would have come up by now. Of course us stockholders wouldn't see the humor in it if it were illegal to trash the seniors.
I was as blindsided as anyone at the Supreme Court overturning the Fifth Circuit en banc panel's finding that the NWS was ultra vires..
Yeah - 6 Libertarians and 3 Liberals - would could go wrong? And no one hates the GSEs more than the Libertarians. That's when the light bulb went off - this has little to do with the law, and certainly nothing to do with the facts.
This is why I find constant accusations of illegality on the part of FHFA and Treasury to be at best useless and at worst counterproductive.
Politics will rule the day when it comes to resolving the conservatorships, and shareholders coming across as entitled can't possibly be a good thing.
Right - every time someone accuses the FHFA or Treasury of doing something illegal I always have the urge to respond with something like - "So what!" or "And your point is...?" And we saw what happened last Friday to the IGs without the required notice to Congress - law? what law? (And he did not fire the worst of the lot!! - now that's criminal). And yes, I still say that writing your Congressperson to demand the release of the GSEs is only making us look like a bunch of greedy folks that are stooges for the hedge funds (that may describe me, but I don't think the rest want to come across like that). You want Congressional involvement?? They will be glad to accommodate us - HERA 2.0 and another 16 year wait.
Nats
TightCoil
29 minutes ago
Now11 days above $5
FNMA
Date - PPS - Volume
Jan 27 $5.46 - 17,666,323
Jan 24 $5.74 32,035,179
Jan 23- $6.50 - 9,201,548
Jan 22 - $6.85 -18,576,012
Jan 21 - 7.01 35,380,100
Jan 17 - 6.91 36,487,200
Jan 16 - 5.40 41,137,700
Jan 15 - 6.21 46,566,200
Jan 14 - 7.04 53,693,000
Jan 13 - 5.49 16,501,000
Jan 10- 5.26 24,269,000
navycmdr
1 hour ago
Freddie Mac's mortgage portfolio gains 4.8%
in Dec. accelerating from Nov. rise
Jan. 27, 2025
Home page Seeking Alpha - Power to Investors
Freddie Mac's mortgage portfolio gains 4.8% in Dec., accelerating from Nov. rise
Jan. 27, 2025 4:56
Freddie Mac's (OTCQB:FMCC) total mortgage portfolio rose at an annualized rate of 4.8% to $3.58T in December, it disclosed on Monday, accelerating from November's 2.4% increase.
The aggregate unpaid principal balance of Freddie's (OTCQB:FMCC) mortgage-related investments portfolio increased by about $8.7B last month.
Mortgage-related securities and other mortgage-related guarantees increased at an annualized rate of 2.0% in December.
Single-family delinquency rate rose to 0.59% in December from 0.56% in the previous month, while the multifamily delinquency rate inched down to 0.40% from 0.41% over the same period.
Single-family refinance-loan purchase and guarantee volume was $7.1B in December, representing 23% of total single-family mortgage portfolio purchases and issuances.
Freddie (OTCQB:FMCC) shares edged up 0.2% in after-hours trading.
DaJester
2 hours ago
If I thought someone else's forecast was more reasonable than mine, I would change my own to match it.
This assumes you are capable of matching someone else's methods, and not stuck in your ways. I'm not sure I agree with that assumption, but I'll give you the benefit of the doubt.
My reputation here is one of being (much) more bearish on the commons than the general consensus, which is such a threat to the status game here that all sorts of personal attacks ensued. Imagine how a round-earther is treated on a flat-earther message board.
I don't use my first signature line to "artificially block the argument", as evidenced by my back-and-forth with you
I stand by my statement - the perception is that you use your "shut up or file a lawsuit" as a weapon to shut down competing arguments. May not be your intent, but that is the impact as felt by posters here. You can claim that I'm mischaracterizing you, but if that's how people take your comment, that's how it's taken. I backed my position with survey data, and your own admission that you are aware of your negative perception. So where is your data to show otherwise?
DaJester
2 hours ago
if Treasury was okay with only a 10% overall IRR then they would have written off the seniors back in 2018 when the total dividends they received provided just such a 10% IRR.
Yes! They should have. But as I'm sure you know but consistently ignore - that wasn't the goal then. The goal back then was to extend the conservatorship and keep taking equity from shareholders. If the goal is to pillage, the government will pillage.
Also, it's rather rich that you said "Treasury historically is fine with simply protecting taxpayer dollars and reaping a modest 8-10% return." when you have proclaimed many times that what Treasury did in the past with AIG and others is irrelevant because every situation is different and we shouldn't expect things to stay the same. Pick a lane.
Wow, I realize you really don't get it. There has been clear indication that the "Kill the GSEs, F*#K the shareholders" stance is changing. Yet you want to ignore this. There has been no indication that Treasury will seek to reap triple-digit gains, outside of what didn't happen in 2020 - and for reasons you are not privy to. The GSEs got into conservatorship differently, and they may exit differently. If you don't think the method will be tied to the goals and objectives of the Exec branch leaders of TODAY, not yesterday, then you are willfully being ignorant.
Maybe put this disclaimer in your autosig:
** KThomp's opinions are based on the stance of Treasury, FHFA, and Congress from 5-17 years ago, and does not take into consideration that their goals may have changed since then.
TightCoil
2 hours ago
Now11 days above $5
FNMA
Date - PPS - Volume
Jan 27 $5.46 - 17,666,323
Jan 24 $5.74 32,035,179
Jan 23- $6.50 - 9,201,548
Jan 22 - $6.85 -18,576,012
Jan 21 - 7.01 35,380,100
Jan 17 - 6.91 36,487,200
Jan 16 - 5.40 41,137,700
Jan 15 - 6.21 46,566,200
Jan 14 - 7.04 53,693,000
Jan 13 - 5.49 16,501,000
Jan 10- 5.26 24,269,000
DaJester
3 hours ago
I believe there is absolutely a connection: the DOJ has demonstrated a solid enough grasp of the relevant laws to win all the NWS cases it was a part of.
Yet, this STILL is not evidence that the DOJ advised Treasury that a write-down was illegal. Your logic here is terrible! And your basketball analogy is even worse! If you think the book quote is accurate, show us evidence outside of the book, such as the law that DOJ could had advised on! Your argument is like saying the Bible is the word of God because it's written in the Bible.
I said that Treasury told Calabria that it would be illegal (as evidenced by Calabria's book), and I inferred that Treasury's opinion was shared (or even originated) by the DOJ given their representation of Treasury in all of the NWS lawsuits.
That's a lot of inferring. Ok, let me try to apply your logic here then. One of these must then be true if your assumption of the book quote is accurate:
1.) There is no such law: DOJ was lying to Treasury by saying the write-down was illegal, and this lie was captured in Calabria's book
2.) There is a law: DOJ would be aware of the law that prevents the SPS write-down, but nobody including you, can find a reference to this law outside of Calabria's book
Of course its also possible that neither DOJ nor Treasury said anything and that Calabria is the person who recalled something imperfectly and put it in his book. Since this is not a recorded meeting record, or official memorandum, or meeting notes, accuracy is not guaranteed. You keep using the word "reporting." This is not news reporting. It's a recollection/memoir by a person. Memories are inherently not accurate and should not be taken as legal fact without further evidence.
Already done. My action is to place a high probability of a senior conversion in my common share price models.
Well that's odd. My action was to build my models and invest accordingly. But you didn't like it when I said my action was to buy shares, not file a lawsuit. So it's ok for you, but not for me? My models and investments can't be my action? Hypocrite.
DaJester
3 hours ago
There's also the matter of people like House Rep Bill Foster who once told Calabria in a hearing that he wanted (then-) current FnF shareholders to be wiped out. It is quite possible that a senior writedown would cause more political problems than a conversion. Calabria's book agrees
So your position is based on the desire by certain Congressmen and former folks at Treasury trying to wipe out the GSEs in years past. You don't think the needle has moved away from this as the desired outcome?
This adds even more scenarios, though the ones where FnF have to raise capital all the way up to the risk-based requirement all but wipe out the commons, even if Treasury stops at 70% ownership.
Why would they stop at 70%? The LP is greater than 100%. Why not keep going and then wipe out Preferred as well? Nobody would care except Preferred and Common shareholders, according to your logic, right? SMH. I don't think they want to wipe out Preferred or Common shareholders, so I don't think those scenarios are as likely as you apparently do. This is just my opinion, time will tell.
However, Treasury can shift its policy away from one of giving absolutely nothing to the shareholders while still converting the seniors and leaving behind just a few billion for the legacy common. A mission change will be needed for FnF to exit conservatorship anyway, but it doesn't necessarily have to involve the legacy common making money, especially from today's prices.
I don't get it. What's the difference between giving common shareholders $0.05, to now a few bucks (based on a "few billion" you stated above)? Charity? Fear of lawsuits? You kept saying those wouldn't happen. So what is the reason for the shift?
I don't think you quite understand what I mean by "mission change." The previous mission was to literally take everything from shareholders and dissolve the GSEs. You apparently think they are going to only change the second part of that sentence and the first part remains intact.
DaJester
3 hours ago
What is your evidence for this 8% return target? According to Treasury's own website, their overall return on the $182.3B AIG investment was $22.7B, which represents a return of 12.45%.
Look again. You are looking at totals, which includes Federal Reserve loans (there are no loans with the GSEs). The Treasury stock portion is listed separately. I thought it was 8% but apparently it's slightly lower than that at 7%. Can you imagine a $70B equity investment and what the perception would be if Treasury received a $70B return? Or a $100B return? You don't think that would have raised any eyebrows?
Treasury wanted to avoid lawsuits from the equity holders if they were to get wiped out. By giving them a token (8%) piece of the company, the Board could satisfy its duties and placate the shareholders.
Right, missing the forest for the trees again. Why not 50% or 60% to better placate shareholders? Because then, Treasury would not have yielded a positive return. They gave 8% to shareholders, because at that level, Treasury reached an acceptable positive return and wanted to avoid providing ammunition for litigation if they were to take more. Treasury's duty is to avoid taking a loss for taxpayers. They grabbed 92% to yield a positive return, albeit a lower return than the Federal Reserve was able to achieve.
Now, if you think Treasury would have gone to triple digit or "maximum" returns just because they could, that's pure speculation. If you have examples of Treasury yielding triple digit returns in other situations, I'd be interested to see them.
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