Wednesday, December 17, 2014

Bill Ackman still adding to Federal Home Loan Mortgage Corp (FMCC), Federal National Mortgage Assctn Fnni Me (FNMA)

Bill Ackman still adding to Federal Home Loan Mortgage Corp (FMCC), Federal National Mortgage Assctn Fnni Me (FNMA)
Fannie Mae
In an interview with Bloomberg Market Makers, Bill Ackman of Perishing Square Capital discussed Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA).
Is there money still to be made after most recent Court Decision?
Ackman was asked whether there was money to be made in Fannie & Freddie after the most recent court decision and he responded yes, and that they have added meaningfully in the last week or two to their positions.
Ackman reiterated that he does not think the court decision addressed the substance of the most important argument that the government took private property and that the government stepped in and took 100% of the profits of Fannie & Freddie unilaterally. He compared it to the government walking in to Apple and taking 100% of the profits. The host quickly stopped him mentioning that the GSEs are in a conservatorship and Ackman responded that it does not mean they can steal.
Conservatorship does not mean you can steal
He reiterated that a government cannot act outside of the law and that the bailout was negotiated with the board and that in the next 18 months they will have fully paid back the government. He believes that the decision will not be allowed to stay.
Fannie and Freddie Larger Part of the Mortgage Market Today
He also reminded us that Fannie and Freddie are even more essential now than they were 5 years ago and that Fannie and Freddie consist of a larger part of the mortgage market then before the crisis.
Fannie and Freddie the only bailed out company without capital
Of all the companies in the financial crisis, Fannie and Freddie are the only ones that currently pose a risk because the government has not allowed them to recapitalize. If the government does not allow them to recapitalize they will continue to pose a risk to the tax payer.

Where does he get the 18 months from? they have paid back all plus interest already. so why 6 more quarters of 8 billion sent to the treasury? $220 billion in already, $48 billion more over that period and F&F will have paid $270 billion for $187 billion funded over 7 years. I assume he is thinking 10% interest on the money, but 10% interest stopped at end of 2012 when sweep was enacted! The LP of $187 billion is already principal plus interest as F&F had to borrow to pay the interest which increased the LP each quarter. The point is by enacting the sweep, the 10% interest stopped. And since the sweep $220billion has been paid on $187billion borrowed.
Part two:
RVB from TIMH717 says about Ackman:
The Ackman news IS material, as he’s had 2 months to buy much cheaper shares, but chose to do so only in the last “1 to 2 weeks” in a meaningful way. Not coincidentally, we’ve had the Watt Senate testimony, the funding of the affordable housing trust, and a sealed response from plaintiffs regarding the Govt’s motion to stay in the Fairholme case, indicating the possible presence of some damning evidence (I’ll only concede “possible”) against the Sweep.
And today Ackman is saying on CNBC 18 months? So is Ackman privy to the sealed info from fairholm? Or at least in contact with fairholm that would have the info to make the statement 18 months? It seems maybe behind the curtain there maybe a release brewing. Watt moving towards F&F recap by his actions and words. Senators coming out a telling watt to remove conservatorship. A new senate banking committee chair that wants fannie gone and private capital only!! We know that cant work as in 2007-2009 all private capital went away and The USA would have been pushed into the middle ages by the lack of mortgage funding on top of all the foreclosures. 18 months from now would be bad timing for release as the presidential race would be fully on and Watt would not dare disturb that. It is more likely to happen after elections or this coming year in 2015! I suspect it would be this year as waiting for the loss in the presidential race would not go over well with release after the certain republican victory. If republicans win and hold all houses then you can be certain the entire mortgage market will be handed to banks on silver platter and the newly enacted affordable housing will be killed on the spot when a new FHFA director is nominated by the president and now only 50% of senate needs to ok it. That would be republican senate and the new nominee will be placed.
THIS is indeed getting interesting!

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