F2 Common Sense

Mostly tweeting about Fannie Mae and Freddie Mac…

[F2 Common Sense @F2commonSense]

@EphraimH1980 @ViewoftheHudson @deividfleims @realDonaldTrump @BillAckman Mark Calabria stated that no legislation was needed, HERA gave the FHFA all the authority they need. Anyone who thinks otherwise will be proven wrong soon enough, can’t wait!

[F2 Common Sense @F2commonSense]

@HorsemanCountry I hope Warsh will be a fed chair that will stand up to wasteful government spending. For the last 20 years the fed has effectively subsidized democrats with lower rates and penalized republicans with higher. It needs to end, level playing field for both!

[F2 Common Sense @F2commonSense]

@seaurchincevice @T_Castelluccio Trump nailed it with the announcement of the implicit guarantee going forward! While they’ve rightfully said spreads are the key to watch, they know the public will just look at absolute mtg rates, so they want those lower to help the narrative. Iran delayed that, but moving fast

[F2 Common Sense @F2commonSense]

@T_Castelluccio @RiparianMan88 Lack of clarity has prolonged the pain for everyone, I’m feeling it for sure. But this is on Trump’s timeline and I think they move sometime in the next 9 months. I’m prepared to wait, though I absolutely share the frustration, down 50% from highs is rough

[F2 Common Sense @F2commonSense]

@T_Castelluccio @RiparianMan88 If they have a 10% return and even a 4% growth rate, they will never go past the 60% of earnings level payed in dividends. I think there’s a strong possibility that F2 never hit the max (full buffers) capital requirements. Basically ‘terminal velocity’ of dividends

[F2 Common Sense @F2commonSense]

@T_Castelluccio @TwoNickleTony IMO if the admin decided to convert the SPS, they would’ve done it ASAP, it’d already be done. The plus side to ‘big bang’ is that it seems much less likely to me that they will convert SPS. Terrible optics to screw shareholders and do an offering the next day/week
$FNMA $FMCC

[F2 Common Sense @F2commonSense]

@T_Castelluccio @TwoNickleTony IMO the plan has been made. Clarity of the details would allow the market to price accordingly, BUT diminishes Trump’s ability to control the price, size, terms of an offer of Treasury’s shares. Also, a rapidly appreciating 5X plus return is a lot of hype to add to it
$FNMA $FMCC

[F2 Common Sense @F2commonSense]

@annmarie The most important questions for Fannie Mae and Freddie Mac are:

Has Fannie and Freddie paid back the government’s bailout funds?
If so, will the Senior Preferred Shares be adjusted to reflect that reality?

THAT is what the market really wants to know! @annmarie

[F2 Common Sense @F2commonSense]

@World_21m Even if it took 2 years, if @BillAckman is right about the SPS being deemed repaid it’s a 5X from here, $7 to $35 or higher. I’ll wait! No rush!

[F2 Common Sense @F2commonSense]

@HorsemanCountry @realDonaldTrump It makes sense for them to wait, but not for too long. F2 become more valuable every day, but they will want to solidify the funds for use before the end of the term in 2028. It’s looking more and more like a post-midterm event, but they won’t want to wait much longer

[F2 Common Sense @F2commonSense]

@HoldenWalker99 The retained MBS cap really a regulatory matter that should belong to FHFA, not Treasury anyway. I would not be surprised to see it removed from the PSPA entirely and delegated to the FHFA

[F2 Common Sense @F2commonSense]

@HoldenWalker99 I have pointed that out. I agree that their MBS purchases are more likely to be put on pause, or even slowed, than forcing the major PSPA amendment before they are otherwise ready. It does add an incentive to move earlier though!

[F2 Common Sense @F2commonSense]

An interesting thought… the F2 $200B MBS buy will be completed sometime around August (see math below). If the Trump admin wants to keep that going, they will need to amend the SPSA to increase the retained MBS caps further
$FNMA $FMCC

[F2 Common Sense @F2commonSense]

This was only the senate so far, but the house is more Trump friendly. $65B for border security, ICE and DHS. The government’s 80% F2 stake could pay that for another 5 years!

[F2 Common Sense @F2commonSense]

$FNMA $FMCC

Funding for partisan programs is the most likely use for F2 proceeds (as it was for Obama)! I have speculated that Trump wants to secure funding for his agenda before showing the F2 $, which can be used for border security, SWF, etc. even if congress splits next year

[ThePersistence @ScottPresler]

VICTORY!

In a massive win for President Trump, the Senate voted 52-47

to FULLY FUND the Department of Homeland Security & ICE:

✅ $38.6 billion for ICE
✅ $22.6 billion for border patrol
✅ $5 billion for DHS

Now, the bill goes to the House.

Call your Representatives & ask them to vote 👉YES👈 to the budget reconciliation package.

This bill does NOT ban the $1.8 billion anti-weaponization fund.

Fully fund DHS & ICE. Then, pass the SAVE America Act!

[F2 Common Sense @F2commonSense]

@neo_tzu53185 Hear me out, in theory… haha. Thoughts?

[F2 Common Sense @F2commonSense]

@Alec_Mazo @JaimeCarreno2 If you are willing to accept that they are never repaying the debt and are inflating at 2% and the risk free rate will be 3.5%, that effectively 1.5% on the debt. That’s $32.8B / .015 = $2.19T! Over $2T!!! That’s about as creative as I can get, but in theory…

[F2 Common Sense @F2commonSense]

Trump has said F2 are worth a trillion in some small rallies before, but the Director of National Intelligence is big news and this is in the Oval Office in front of the press. Could be big!
$FNMA $FMCC

[Thurm @World_21m]

🚨 FANNIE MAE AND FREDDIE MAC ARE WORTH 1 TRILLION DOLLARS - TRUMP

PULTE POSITION AS DNI IS ONLY A TEMPORARY POSITION, NOT PERMANENT-TRUMP. $FNMA $FMCC

[F2 Common Sense @F2commonSense]

@Snarkytrashpan2 @StopTheStealF2 @Pm0130454849892 IPO without the ‘I’, will this public offering be considered initial? Secondary? Additional? Does it matter? It’s a Public Offering (PO) either way

[F2 Common Sense @F2commonSense]

@Alec_Mazo @JaimeCarreno2 If you are willing to accept that they are never repaying the debt and are inflating at 2% and the risk free rate will be 3.5%, that effectively 1.5% on the debt. That’s $32.8B / .015 = $2.19T! Over $2T!!! That’s about as creative as I can get, but in theory…

[F2 Common Sense @F2commonSense]

@Alec_Mazo @JaimeCarreno2 It depends how creatively you value them. Fannie earned $14.4B and Freddie $10.7B. They payed $3.6B and $2.6B in taxes, another $3.4B and $3.0B in TCCA fees. At 80% ownership it’s a total of $32.8B for the gov, with a debt rate of 3.5%, $32.8B / .035 = $936B is basically $1T

[F2 Common Sense @F2commonSense]

@SnagsLewis1978 @TylerEHand @pulte The problem is, I could see there being counter arguments or other factors that I’m missing. Maybe converting early leaves time for legal challenges, deeming SPS repaid early might give better market price for when it’s time to sell. Weaker arguments IMO, but it’s hard to foresee

[F2 Common Sense @F2commonSense]

@SnagsLewis1978 @TylerEHand @pulte And waiting to deem them repaid actually makes some sense because it will add to the hype and the positive share momentum. Plus there’s less time to criticize the move. Theres 0 chance the Dems don’t spin the ‘enriching his buddies’ narrative