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All 110 Slides Of Bill Ackman's Fannie Mae Pitch

Tyler Durden's picture




 

Everything (all 110 slides of it) you wanted to know about the GSEs but were afraid to ask... (with Bill Ackman's biased long perspective)

 

Ira Sohn Presentation 2014.05.05

 

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Wed, 05/07/2014 - 13:49 | 4736701 newsguy68
newsguy68's picture

zero hedge...news you need to cover....

 

Obama Regime Science Czar John Holdren Wants To Sterilize Whole Populations

 

http://survivalbackpack.us/obama-regime-science-czar-john-holdren-wants-...

Wed, 05/07/2014 - 13:55 | 4736731 Zirpedge
Zirpedge's picture

Yeah, well now the policy is overt. Before you had to eat GMO processed foods sprayed with glycophosphates to sterilize yourself. Sure it was a bargain (organic foods are expensive) but now you need to pay for fertility treatments or adopt.

Wed, 05/07/2014 - 14:13 | 4736799 maskone909
maskone909's picture

how about elaborating on FINRA's commitment to attacking investors privacy by means of tracking their trades?

Wed, 05/07/2014 - 14:26 | 4736840 NotApplicable
Wed, 05/07/2014 - 13:52 | 4736716 PlusTic
PlusTic's picture

Ackman has a serious Power Point obsession...they are almost always over 100 pgs...

Wed, 05/07/2014 - 13:58 | 4736745 Zirpedge
Zirpedge's picture

I'm fond of the Johnson / Crappo proposal. It's a good old bipartisan "path to hell paved with good intentions" legislation. 

Wed, 05/07/2014 - 13:53 | 4736722 rqb1
rqb1's picture

Thanks to zh for posting info on Ackman's 10 % position in November.

Wed, 05/07/2014 - 13:56 | 4736734 Dumpster Fire
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Fannie Mae could be worth $23 to $47 a share over time, said Ackman, 47, speaking at the 19th annual Sohn Investment Conference in New York, where he referred to a 110-slide presentation on the mortgage companies. Fannie Mae reversed losses and rose 3 percent to $4.10 at 4 p.m. in New York trading. Freddie Mac shares rose 6.3 percent to $4.23.

Pershing Square has about 11 percent economic exposure to Fannie Mae and Freddie Mac shares based on common stock outstanding, a stake first disclosed last year.

 

Wed, 05/07/2014 - 14:29 | 4736855 CrazyCooter
CrazyCooter's picture

I gave up on a house last year. Just stopped paying (I moved to another state for work/life). Finally got auctioned in early March. Fannie is involved. After two months, they STILL can't tell me what I owe (or maybe they owe me). I would prefer to get this settled somehow, pay what I gotta pay, and move on with my life.

And to boot, this is before the next housing market crash.

But, this is the new normal, where capital collapses into a financialization singularity emitting profit particles or some other magical bullshit. Jump in, the gravity well feels great!

Regards,

Cooter

Wed, 05/07/2014 - 14:00 | 4736741 slightlyskeptical
slightlyskeptical's picture

Fannie and Freddie should not have private shareholders period. The government backs it 100%...they should own it 100% and profits should go straight to the Treasury. Or let social security take it over so they can earn an honest return. Why the hell should we allow the Acikmans of the world to profit instead?

Wed, 05/07/2014 - 18:52 | 4737636 waterhorse
waterhorse's picture

Why?  Because it's a big club and we ain't in it.

Wed, 05/07/2014 - 14:03 | 4736757 philosophers bone
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I read up to the point where he said the $5 Trillion "guarantee business" was "low risk".  Then I stopped.

Wed, 05/07/2014 - 14:12 | 4736790 maskone909
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i guess you could get long housing here.  afterall, it cant get much worse.

Wed, 05/07/2014 - 14:14 | 4736802 Clayton Bigsby
Clayton Bigsby's picture

That's 110 pages of book-talkin there - impressive...

Wed, 05/07/2014 - 14:28 | 4736847 Dark Space
Dark Space's picture

The point he's making is that it is low-risk relative to the FIA business, and it could be low-risk if you stripped out the riskiest portions (Alt-A, Subprime), and perhaps there are better ways to "insure" against losses than just doubling the guarantee fee... So, you missed some good points if you stopped that early.

Wed, 05/07/2014 - 15:51 | 4737112 ghostfaceinvestah
ghostfaceinvestah's picture

Many of his slides are contradictory - he points out that most of the rest of the developed world does not use 30 year fixed mortgages, then says that preserving 30 year fixed mortgages is essential. Why? He gives a few reasons that are easily disputed:

Long term amortization - just because the rates are not fixed for 30 years, doesn't mean you can't amortize over 30 years.

Ability to refi - ask the millions of underwater borrowers how easy it has been to refi, versus a floating rate product that automatically floats down when rates decrease in a crisis.

His presentation is filled with logical flaws like this.

Mel Watt has a speech coming up next week - with a few words he could kill the Fannie investment thesis. He could do a number of things to destroy the profitability of these companies instantly.

Wed, 05/07/2014 - 16:08 | 4737153 AndyM
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If you can't dazzle them with brilliance, baffle them with bullshit." - W.C. Fields

Wed, 05/07/2014 - 16:08 | 4737161 ghostfaceinvestah
ghostfaceinvestah's picture

Here's another inconsistency - he claims private capital wouldn't generate adequate returns at current gfee levels, and then goes on to evaluate the returns assuming 5%, 7.5%, and 10% equity levels.

 

But THEN, he claims the GSEs should only have to hold 2.5% equity, based on the quality of the business.  In terms of a leverage ratio, that is 40:1 risk to capital (a level nearly equal to, btw, the leverage the AAA financial guarantors held when he criticized them back in 2003).

So how come 40:1 leverage is OK for the GSEs, but not OK for private capital?  Under the proposed J-C legistlation, private capital would still have to pay 10bps annually for a government backstop, and hold 10% cushion against losses (maybe 5% of that being equity).  

Easy to make the numbers tilt in your favor if consistency isn't a binding constraint.

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