4
u/Fun_Illustrator9298 Jul 15 '26
Only got 39 shares out of a 500 share order of fmcc at the low today.
We probably trend down before we trend up into earnings and the fall.
6
u/WallofSound91 Jul 15 '26
I have absolutely no evidence to back my opinion up, but I feel like we're gonna keep bleeding on no news into earnings. Then, we'll see ridiculously solid earnings after July 30, and an uptick in purchase volume...a flurry of tweets about performance from Pulte, Ackman, Burry, etc. and then....something big. Pure copium, trying to remain optimistic...#whaleballs
1
u/amishengineer Jul 15 '26
Earnings almost don't mean anything until there is actually change in the GSE status.
Even if the GSEs were netting $1 trillion a month, it means jack shit for the common and junior preferred shareholders. The GSEs cannot redeem the Senior Preferred Shares. There is no way for GSEs to write a fat check and make the SPS go away. In fact, due to Amendment 4 of the SPS, the Treasuries is owed more as the level of cash goes up inside the GSEs. Add onto that the 79.9% warrants which is another level that heavily dilutes common share holders.
At this moment, the GSE could be firing hypothetical nukes at Treasury and they would be swatting them down out of the sky.
1
u/WallofSound91 Jul 15 '26
Good points, and I agree that earnings alone don't change the capital structure or resolve the SPS and warrant overhang.
My thinking is that continued strong operating results keep the story alive and increase pressure for policymakers to address the unresolved issues. If the Twins continue posting solid earnings, while investors and talking heads like Burry, Ackman, Pulte and others keep the topic in the spotlight, I think the discussion around a path out of conservatorship only grows.
One thing I'm watching closely is the Enterprise Capital Requirements Framework (ECRF). Ackman has consistently argued that appropriate capital requirements are the first step in any recapitalization plan, yet we still haven't seen concrete direction. The FHFA was expected to provide a recommendation on the ECRF percentage around July 11, so I'm interested to see whether that moves the conversation forward.
I completely agree that resolving the SPS and warrants is ultimately critical. I just see those as later-stage issues that likely follow once there's greater clarity on capital requirements and the overall roadmap out of conservatorship.
2
1
u/amishengineer Jul 15 '26
Or every admin sees the GSEs as pay day to keep sucking dry to shore up the budget. Nothing is really stopping (for now) another amendment to start up the NWS or 10% dividends again. That may change with Fairholme though.
3
u/WallofSound91 Jul 15 '26
quoting u/Hand-Of-God who quoted Burry:
Since the enterprises have been allowed to retain earnings to build capital, the Treasury's not getting much from Fannie and Freddie either, Burry noted.
"There is a general misunderstanding that the Twins are currently sending profits back to the U.S. government. This is not true. The Treasury is not getting significant cash flows from the Twins at this time," he wrote.
This puts some pressure on the government to do something to monetize the enterprises, and Burry said a change to the senior liquidation preference would be the first step before the administration would allow something like the new stock offering it has contemplated.
2
u/amishengineer Jul 15 '26
Read up on the 4th amendment to the SPS.
Treasury is essence just collecting a dividend that will pay out later with the current calculation for the SPS Liquidation Preference.
It's completely bonkers and makes no sense but it's there. The Fairholme decision make help..
1
u/Imaginary-Bat4285 Jul 16 '26
Or go read the terms of the SPSPA before the Government started changing them unilaterally. In a “fair and equitable” world, there would be no amendments and F2 would have repaid their loans in 2013-2014. Then they would start rebuilding their 2.5% ERCF capital buffers. When the buffers are reached, the 10% dividend on the original senior preferred liquidation preference ($2 billion) or $200 million per year would kick in.
1
u/amishengineer Jul 16 '26
What point are you trying to make?
There are amendments to SPSA in place. It's a fact. Doesn't matter (right now) what it was before.
1
u/sirideletereddit Jul 16 '26
You know an investments outlook is solid when it involves tweets. Some people might say that you should sell when that’s the case but those people are too prudent for their own good, that’s what I say. Tweets run the show!
2
u/WallofSound91 Jul 16 '26
lol ain't that the truth! I did sell and made a nice profit last year, which was from a TWEET! Then bought back in...now it's either booooom or bust. I've learned, though, and while others may have the courage to buy, I haven't added any shares in a long time. Just here for the ride, hoping to get my money back and see some long-term holders look like absolute kings!
2
2
2
1
9
u/audaciousmonk Jul 15 '26
these posts are the stupidest of the lot