Ephraim Hirschfeld

[Ephraim Hirschfeld @CaliRefugee1]

@JonOksenholt Correct 2x a day 😂

[Ephraim Hirschfeld @CaliRefugee1]

@GroveNeal From my observations over the years it seems like Trump values loyalty in this circle, people who will pickup whatever cause he wants them to even if it's not in their sweet spot. Who has he lauded? Rubio and Pulte. Both of them for better or worse will do whatever job he asks.

[Ephraim Hirschfeld @CaliRefugee1]

@ThePPseedsShow @JonOksenholt should consider funding the Pulte signal 😂

[Ephraim Hirschfeld @CaliRefugee1]

I see that the government has at least 5 key problems:

1. Win or lose the litigation is real and a time suck in an administration that's halfway done
2. The heavy dilution event pushed the shares down deeper into the penny stock doldrums. The liquidity will be very thin and institutional investor confidence will be low.
3. Institutional asset managers will not commit new capital or pay meaningful valuation multiples. Institutional capital requires clean structures, predictable residual claims, and credible boundaries on future intervention. In court of public opinion this action destroys the foundations of trust.
4. The warrants carry an expire in 2028, subject to extension. A multi year legal battle kicks the can down the road to a future administration with entirely different priorities around housing finance, G-fees, and privatization. That delay guarantees that today's policy preferences won't survive to the next admin. I don't think Trump wants F2 being converted into a cash cow for the oppositions priorities.
5. Every dollar of dilution is a dollar lost in warrant value. The companies with a clean cap structure, clear backstop, reduced capital buffers and trading on an exchange can achieve a valuation that makes the warrants more valuable than the SPS/LP and that doesn't take a trillion dollar valuation.

[Ephraim Hirschfeld @CaliRefugee1]

Great summary of Burry vs Ackman's position.

Much to the consternation of most of us the government is taking a methodical approach to resolving the capital structure of F2 and uplisting the shares. That also means the administration is now working with a compressed timeline.

This post makes excellent points that the SPS to common conversion would require an amendment to the PSPA. That amendment would invariable end up in prolonged legal battles.

Even if the government won it wouldn't be in 47's term and he wouldn't be able to allocate the governments windfall. Additionally, you would end up with the government owning 95% of a penny stock essentially eviscerating the value of the warrants. It has been stated many times before there is a breakeven point where it is better to own 79.9% of a very large pie than 95% of a tiny one.

[Snowball Captial ❄️☃️ @SnowballCaptial]

I think Michael Burry is wrong to sell $FNMA and $FMCC common.

And I think Bill Ackman has the better map of how this ends.

Burry's Oct 11 note is clear: he sold the common, bought junior preferred, and flagged a Treasury conversion of the senior preferred (SPS) into common — dilution of 90%+.

That risk is real on paper.
I just don't think it's the base case the Trump team is trying to deliver.

Here's why I side with Ackman:

1. The SPS has already been paid — economically.

Fannie and Freddie drew about $193B from Treasury after 2008.
They have since returned about $301B in dividends.

Ackman's point is simple: treat the senior preferred as repaid, don't invent a brand-new dilution event to wipe out private common holders.

2. Ackman's path preserves the common.

His three-step plan:
→ Treasury / FHFA amend the PSPA so the SPS is treated as satisfied
→ Treasury exercises its warrants for ~79.9% of the common
→ Relist on the NYSE while conservatorship continues

Government control stays.
Mortgage markets aren't disrupted.
Existing common isn't vaporized by a 90% conversion.

That is "walk before you run," not "convert and crush."

3. Burry is hedging a scenario Ackman is fighting.

Burry's move makes sense if you believe Wall Street's conversion base case wins.
Preferred ranks above common if that happens.

But if the political goal is to show taxpayers a win, rebuild tradable equity, and keep housing finance quiet — converting SPS into a 90% wipeout of private common is a terrible headline.

It's the path that creates lawsuits, not a clean listing story.

4. Price action isn't the thesis.

Both stocks have given back most of the post-election rally.
Burry reads a head-and-shoulders.
I read a messy policy delay in a narrow AI-dominated market.

Weak charts don't settle who owns the economics of the GSEs.

My takeaway

Burry is brilliant at smelling risk.
Here, I think he's underweighting incentives.

A conversion that destroys private common may look neat in a spreadsheet.
It looks ugly in an administration that wants to claim it fixed Fannie and Freddie.

Ackman's framework asks a better question:
How do you end conservatorship without blowing up the mortgage market — and without stealing the residual that private capital already paid for once?

On that question, I think Ackman is closer to right.

$FNMA $FMCC

Sources:
Burry, Cassandra Unchained (Oct 11, 2026)
Ackman / Pershing Square commentary on the three-step GSE plan and SPS repayment

[Ephraim Hirschfeld @CaliRefugee1]

@seaurchincevice I'm not smart enough to evaluate inequalities without AI assistance 😂.

The world is a complex system and cannot be distilled down into linear equations. Ceterus paribus are perhaps the two words that best explain why most macroeconomic theory doesn't hold up in practice

[Ephraim Hirschfeld @CaliRefugee1]

@seaurchincevice Yay I love oversiplifications 😊. Percent of what? You act like it's a % of the same size pie that results in homogenous, similarly liquid, marketable securities.

[Ephraim Hirschfeld @CaliRefugee1]

@JonOksenholt @hogfan7878 It's like Buffet said. Be greedy when others are fearful. LFG! 🚀

[Ephraim Hirschfeld @CaliRefugee1]

@seaurchincevice Collins is a nutshell says HERA “permits the Agency to act in what it determines is ‘in the best interests of the regulated entity or the Agency.’”

Just because you have a worldview of what the best interest is doesn't mean that is shared by Bessent or Pulte.

[Ephraim Hirschfeld @CaliRefugee1]

@CompoundRich @buysidedesk @TylerEHand @BillAckman Thanks! Great quote!

[Ephraim Hirschfeld @CaliRefugee1]

Fannie Mae and Freddie Mac don't control rates. Their actions can impact spreads and the cost of a mortgage the lion's share of rates are a runaway 10Y Treasury. As long as the process doesn't widen spreads it's irrelevant to the absolute value of rates.

That said, I don't think the plan would be immediate privatization. More likely they:

1. Clean up the capital structure
2. Adjust the ERCF buffers
3. Uplist to a major exchange while in conservatorship
4. Provide a clearly definition of what a guarantee means (i.e. use undrawn SPS balance as a line of credit)
5. It no harm done to spreads then end the C-ship

[Ephraim Hirschfeld @CaliRefugee1]

@DoNotLose 254 billion undrawn is limited? How big of an unmitigated disaster are we planning for?

[Ephraim Hirschfeld @CaliRefugee1]

@pratjoey @CerlogicFounder In April he launched the CEF

[Ephraim Hirschfeld @CaliRefugee1]

@pratjoey just a few simple points to reinforce what you're saying.

1. He literally just launched a new CEF and initiated new positions in F2
2. He cumulatively has 215 million shares between the two. We barely seen 215 million in aggregate volume in a quarter.

Besides the fact that he has clearly taken actions to get more exposure to F2, it's simply impossible that he would have liquidated a position that large recently. The volumes are simply too small.

People want to blame short sellers, people want to blame hedge funds for rug pulling, people want to blame government in action, but when you look at the volume, the cratering share price mostly has to do with small paper-handed investors.

[Ephraim Hirschfeld @CaliRefugee1]

@TylerEHand @JonOksenholt @HorsemanCountry Haha was trying to be polite since I didn't ask him for permission

[Ephraim Hirschfeld @CaliRefugee1]

@JonOksenholt @TylerEHand I got this from a good friend (don't want to tag him w/o permission), but I think this is an accurate summary of so many people on this topic.

[Ephraim Hirschfeld @CaliRefugee1]

@JonOksenholt @TylerEHand You are the largest $FMCC common holder that's not named Ackman or a large mutual fund. Your best pal capitulated and moved to preferred shares only.

[Ephraim Hirschfeld @CaliRefugee1]

@TylerEHand Glad you didn't Burry your head in the sand 😉

[Ephraim Hirschfeld @CaliRefugee1]

For the avoidance of doubt, GSE shares do not trade at the level they do because of trading on OTC exchanges. They trade at depressed values because of the risk of heavy dilution. If the administration signed a piece of paper tomorrow that said the SPS/LP were deemed repaid you'd wake up Monday morning and the price would be $25-30. To quote Michael Burry and Metallica nothing else matters.