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Ackman, Berkowitz Slammed After Fannie Mae Plunges 60% On Court Ruling

Tyler Durden's picture




 

It is not a good morning for Bill Ackman's Pershing Square or Bruce Berkowitz's Fairholme Capital, or the US government for that matter, of course, which happen to be the three largest investors in Fannie Mae:

 

The reason: FNM stock, which at last check, was crashing by nearly 60%.

 

So why is FNM plunging? Perhaps a better question is why they soared as much as they did in the first place. 

For the answer we go to Bill Ackman and his jolly copycat groupies. As Bloomberg reminds us, Ackman, speaking at the 19th annual Sohn Investment Conference in New York, said Fannie Mae could be worth $23 to $47 a share over time, where he referred to a 110-slide presentation on the mortgage companies. 

More:

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. While lawmakers are weighing methods to wind down the companies, Ackman said mortgage rates would jump without the government-sponsored enterprises.

 

There is no viable alternative,” to Fannie Mae and Freddie Mac, Ackman said today in a Bloomberg Television interview with Stephanie Ruhle after the Sohn presentation. “Preserving the 30-year prepayable fixed-rate mortgage -- it’s like the bedrock of the housing system -- is critical.

We think the only way to do it is by preserving Fannie and Freddie.”

$23 to $47... or zero. Because while there may be no viable alternative, Ackman forgot one key thing: his adversary is the US government, a place where making trillionaires out of billionaires is not exactly in fashion right now. And that is precisely what would have happened if the Ackmanites had gotten their way in litigation that would assure that private stakeholders would get all the benefits of the GSE bailout with none of the downside risk (because after all these were, are and always will be guaranteed by the US government). \

Then this happened.

As AP reports, late yesterday a federal judge on Tuesday ruled against investors who are trying to collect billions of dollars in profits of government-chartered mortgage companies Fannie Mae and Freddie Mac. The decision by U.S. District Judge Royce Lamberth to dismiss the investors' lawsuits was a victory for the government. It was also a huge hit to the litigants case, and is the reason why as of right now, Pershing Square is worth a few hundred million less (and it will be worth far less if and when the SEC cracks down on Ackman's illegal purchase of Allergan calls).

More from AP:

"There can be no doubt" that the investors understood the risks involved in investments in closely regulated companies such as Fannie Mae and Freddie Mac, Lamberth wrote, and therefore have no reasonable expectation of profiting.

 

During the recent mortgage crisis, the government pumped $187 billion into the troubled companies, which have since recovered and now have quarterly profits running into the billions.

 

Recovering money for itself, the government is collecting a dividend amounting to nearly every dollar of the companies' net worth. That leaves nothing for private investors who had put money into the companies when they faced collapse.

 

Investors had hoped lawmakers or the courts would force the government to give up rights to the earnings. Among those suing the government are hedge fund firm Perry Capital LLC and mutual fund company Fairholme Capital Management LLC.

And while we don't feel bad for billionaires Ackman, Perry, Fairholme et al, we do commisserate with all those piggybackers who thought that Ackman's 110 slides on the matter were enough. Clearly, they weren't.

 

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Wed, 10/01/2014 - 09:10 | 5274590 Divided States ...
Divided States of America's picture

Its nice when two motherfuckin zionist wall street shills lose on a trade for once. Make that THREE. I see Carl I CAN Icahn on the list too...

Wed, 10/01/2014 - 09:53 | 5274717 Headbanger
Headbanger's picture

YEAH BABY!

Here's your Black Swan you mooks!

The """market""" is totally fuuuuuccckkkkkedddddd......  (read it as Ron White)

 

AND WATCH FOR A BREAK OF THE 125 DMA TOO YOU MOOOOKS!

http://www.marketwatch.com/investing/index/SPX/charts?symb=SPX&countryco...

 

And what I tell you!!??

http://www.zerohedge.com/news/2014-09-30/stock-market-top#comment-5271129

 

Wed, 10/01/2014 - 10:05 | 5274840 Spine01
Spine01's picture

If the problem were the market it'd be easy to fix, it's the economic system overall. The system is broken and has been for years. The distribution of wealth and basic resources has been biased towards the west for ever, and the system is not able due to energy-related reasons to extend that model to the east. So the Chinese miracle, was the doom for the west. 

This has been known for ever to the think tanks. So the only question was whether or not a change could be managed that lowered the middle class income of America to a point compatible with the East growth, without triggering a revolution. 

 

For this model a US resurgence is a very bad thing because it will bring back the spectrum of wwiii

Wed, 10/01/2014 - 10:18 | 5274976 Poundsand
Poundsand's picture

Most slide shows only to to 110 slides.  Mine goes to 111!

Wed, 10/01/2014 - 10:56 | 5275193 aVileRat
aVileRat's picture

And if the Pharma company that may be considered a ponzi scheme on the magnitude of Tyco can not roll up a new equity multiple, what will become of Bill ?

 

Wed, 10/01/2014 - 11:44 | 5275434 0b1knob
0b1knob's picture

A review of the way General Motors bond holders were treated would have been useful to these people.

EVERYTHING belongs to the US government now.   EVERYTHING.

Wed, 10/01/2014 - 12:06 | 5275526 Ms. Erable
Ms. Erable's picture

Not a fan of banksters (except as tree ornaments), but is anyone besides me stunned, shocked, and gobsmacked that the government judge ruled in favor of... the government? I mean, whocuddaknode?

Wed, 10/01/2014 - 12:08 | 5275535 SafelyGraze
SafelyGraze's picture

fannie mae price drop?

awesome!

that means more for me!

hugs,
misteryellens 

Wed, 10/01/2014 - 13:10 | 5275891 ebworthen
ebworthen's picture

Yes, the U.S. Government, and the highest "bidder" for their services.

Ackman forgot that he isn't Goldman Sachs nor Jon Corzine.

When you aren't sure who the patsy at the poker table is...

Wed, 10/01/2014 - 13:29 | 5276003 PiratePiggy
PiratePiggy's picture

I smiled when the alarm clock woke me up last week to the radio news and the announcer had the surprise news that Obama authorized the bombing of Corzine....

 

 

 

 

 

only later did I read that it was Khorasan rather than that crook, Corzine.   :(

Wed, 10/01/2014 - 11:24 | 5275314 SillyWabbits
SillyWabbits's picture

Slide presentations are not numerically powerful.  More slides do not an irresistible presentation make.

One must employ power colors and tempting fonts combined in an infectious panoply of artistic rendering.

That said, 111 slides and the guts to go one step beyond, is impressisve.

Wed, 10/01/2014 - 14:06 | 5276246 Poundsand
Poundsand's picture

It's a Spinal Tap reference.

http://www.youtube.com/watch?v=KOO5S4vxi0o

"When you need that extra push over the cliff."

Wed, 10/01/2014 - 09:50 | 5274812 JRobby
JRobby's picture

Don't sugar coat it Divided, just blast away at them!!! Yea!

They are all tribal savages!

Wed, 10/01/2014 - 16:14 | 5276922 tvdog
tvdog's picture

Judge Royce Lamberth "served" on the FISA kangaroo court, so I guess Ackman and Berkowitz thought he was reliable. Unfortunately for them, he turned out not to be a good Shabbat goy after all! Just like that ungrateful Carmen Segarra. She went to Cornell Law and worked at Citigroup, how could they know she would stab them in the back?

Oy, vey! This is what happens when you ignore the wisdom of the Talmud: "The best of the gentiles: kill him; the best of snakes: smash its skull; the best of women: is filled with witchcraft." - Kiddushin 66c.

Wed, 10/01/2014 - 09:11 | 5274600 Dr. Engali
Dr. Engali's picture

Ouch! That one is going to leave a mark. 

Wed, 10/01/2014 - 09:13 | 5274614 NoDebt
NoDebt's picture

Ackman is losing his touch faster than Bill Gross.  And a lot earlier in life.

Wed, 10/01/2014 - 09:20 | 5274643 Dr. Engali
Dr. Engali's picture

It must be the hair.

Wed, 10/01/2014 - 12:38 | 5275715 tvdog
tvdog's picture

Yep, it's in Judges.

Wed, 10/01/2014 - 09:12 | 5274607 NoDebt
NoDebt's picture

What is this feeling I'm having towards the government's position?  What is it?  Is it..... agreement??  

My God, don't tell me I'm agreeing with the government on something.  I need to step outside, have a smoke and think about this.

Wed, 10/01/2014 - 10:32 | 5275051 gmrpeabody
gmrpeabody's picture

It is strange..., is it not?

Wed, 10/01/2014 - 09:13 | 5274609 LawsofPhysics
LawsofPhysics's picture

"Full FAITH and credit", the taxpayers lose, again...

Wed, 10/01/2014 - 09:19 | 5274642 NoDebt
NoDebt's picture

Reread the article.  This is the government NOT paying money to vulture capitalist "investors".  If the decision had gone the other way, the government would be paying taxpayer money OUT to these guys.  Frankly, I find it hard to pick out who the "good guys" are on this one, but I'm just talking about this from a "taxpayer" perspective.

Wed, 10/01/2014 - 09:23 | 5274663 LawsofPhysics
LawsofPhysics's picture

Still, have a look at who the largest shareholder is.  Where do you see any evidence that the hedge fund pretty boys don't still have access to cheap money?  I would contend that they still do.

Wed, 10/01/2014 - 09:29 | 5274694 NoDebt
NoDebt's picture

The government is currently keeping ALL the money.  This lawsuit would have made them share with the other investors on the list from #2 on down.  Now they still get to keep it all.

The hedge fund boys still have plenty of access to cheap money.  Just not THIS money.

Wed, 10/01/2014 - 09:40 | 5274755 LawsofPhysics
LawsofPhysics's picture

"The hedge fund boys still have plenty of access to cheap money.  Just not THIS money."  -- which is a step in the right direction.

Fuck those pretty boys, it;s not like any of them actually know what real work is.

Look at all the junk bonds getting bought up this morning...

Central banks and governments are one in the same and are the market...

Wed, 10/01/2014 - 10:28 | 5275030 The Merovingian
The Merovingian's picture

One thing is for certain though, the US Taxpayers aren't ever going to see any of this money ... thus, we ARE fucked.

Wed, 10/01/2014 - 10:37 | 5275072 gmrpeabody
gmrpeabody's picture

... unless you're one of the many receiving your 5# box of processed cheese every week.

EDIT:  But in that case, you wouldn't actually be a tax payer..., my bad.

Wed, 10/01/2014 - 09:13 | 5274610 vmromk
vmromk's picture

Easy fix..........PRINT.

Wed, 10/01/2014 - 09:14 | 5274618 Stockmonger
Stockmonger's picture

Seaman's Capital looks pretty smart for selling this morning.

Wed, 10/01/2014 - 09:15 | 5274625 LULZBank
LULZBank's picture

Seems like pAckman only gets out of bed and opens his mouth to loose money. lulz

Wed, 10/01/2014 - 09:16 | 5274627 youngman
youngman's picture

Somehow I have a feeling they will get their payouts in the future...at our expense...

Wed, 10/01/2014 - 09:23 | 5274665 NotApplicable
NotApplicable's picture

Especially during an election year.

Wed, 10/01/2014 - 10:03 | 5274644 astoriajoe
astoriajoe's picture

I can almost imagine his mom watching the tv at home as the quotes scroll by, shaking her head, saying, "he worked so hard on that presentation.  that's too bad. "

Wed, 10/01/2014 - 09:21 | 5274650 NoDebt
NoDebt's picture

Is there some reason the much-touted "circuit breakers" on the exchanges didn't kick in on this ass whipping?

Wed, 10/01/2014 - 09:29 | 5274696 LULZBank
LULZBank's picture

That depends on whose ass is going to get whipped.

Wed, 10/01/2014 - 09:23 | 5274664 Dr. Engali
Dr. Engali's picture

"And while we don't feel bad for billionaires Ackman, Perry, Fairholme et al, we do commisserate with all those piggybackers who thought that Ackman's 110 slides on the matter were enough. Clearly, they weren't."

 

 

I have no sympathy. Do your own due diligence or pay the price.

Wed, 10/01/2014 - 09:28 | 5274687 NotApplicable
NotApplicable's picture

Stupid should hurt!

Besides, when betting on Uncle Sugar sweetening your pot, you deserve to lose it all, as you're not adding wealth to society, but extracting it.

Wed, 10/01/2014 - 09:34 | 5274714 BeetleBailey
BeetleBailey's picture

well said Doc....

Wed, 10/01/2014 - 09:25 | 5274666 Spaulding 3.0
Spaulding 3.0's picture

Slammed like Silver ... ?

turd ? mosley ? silver surfer ? gulp ..... what happened with all the doomers pumping silver ..... ?

 

“If you own your own home free and clear, people will often refer to you as a fool. All that money sitting there, doing nothing.”

- Anthony Hsieh, CEO Lending Tree

 

"When I hear [about a housing bubble] I get the sense that people aren't connecting the dots.”

- James Glassman, JP Morgan Chase Economist

 

"I'm so mad at my neighbor. I bought my new home here in Ashburn last summer and plan to sell it next year (after holding two years to avoid taxes) to make a nice return on my investment. The problem is my neighbor is trying to sell his house (very similar to mine) right now and he keeps lowering his asking price. Each time he lowers his price, I see my potential profits next year getting squashed. Doesn't he realize he's hurting the comps for all of his neighbors by doing this? I don't think he is acting very "neighborly" by doing this. I want to say something to him and tell him he should stop putting his interests ahead of his neighbors. It's people like him who are ruining the market for the rest of us. If he would just refuse to lower his price, we could maintain our comps and everyone would benefit. What can I do to stop him?"

- Question during a real estate chat held by the Washington Post.

 

Wed, 10/01/2014 - 09:30 | 5274699 NotApplicable
NotApplicable's picture

That guy should double-down and buy his neighbor's house at a premium, duh.

Wed, 10/01/2014 - 09:56 | 5274850 LawsofPhysics
LawsofPhysics's picture

I'd say that there is evidence that those with cash to spend are doing exactly that.  Boom, another revenue-generating physical asset...

Wed, 10/01/2014 - 10:09 | 5274926 Spaulding 3.0
Spaulding 3.0's picture

“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.”
- David Lereah, NAR’s chief economist, August 2005

Wed, 10/01/2014 - 11:49 | 5275453 F0ster
F0ster's picture

No bid is a no bid. Even in houses.

Wed, 10/01/2014 - 09:54 | 5274843 LawsofPhysics
LawsofPhysics's picture

one last chance to get physical...?

 

Go ahead push silver back under $12 an ounce, then let's see who can actually get delivery of this industrial metal.

Wed, 10/01/2014 - 10:02 | 5274873 Spaulding 3.0
Spaulding 3.0's picture

I was the only guy saying sell as the three bears video's drove it over 40-43$$$ ..

 

.... stary eyed doomers looking for 80$ ..... LOL' This is fun. 

 

Who is your daddy bitchez'... mosley ? bunker boy' .... come out, come out ....

Wed, 10/01/2014 - 10:04 | 5274890 fuu
fuu's picture

You were only 4 years early, and as your fan club likes to spout, "early equals wrong".

Wed, 10/01/2014 - 10:14 | 5274953 Spaulding 3.0
Spaulding 3.0's picture

sorry buddy. 

 

i was screaming sell in the $40's as the pom pom wavers were talking $65 and change .....

 

silver doomers monkeyhammered

 

 


Part 3 - Silver Manipulation Explained - three bears throwback'

http://www.youtube.com/watch?v=AId_UiPtPpQ

Wed, 10/01/2014 - 10:16 | 5274973 fuu
fuu's picture

You were screaming sub 20 while it was in the 40's. Your revisionism has gotten worse with age.

Wed, 10/01/2014 - 12:41 | 5275719 Spaulding 3.0
Spaulding 3.0's picture

indeed.

 

housing bubble quotes infer 50% said haircut ..... lol, not a slight dip.... all day , all night, for months on end. .... all the doomers moaned like bitchez' " no, can't be, it onto the $60's and beyond .... "

dollar denominated debt for the win !!!!

looking at the silver ko'd in the teens hmmmmm .... priceless. next .... i did not see your weak ass back then. still stung from the popping of that bubble hmmmmmmm ?

Wed, 10/01/2014 - 15:52 | 5276786 fuu
fuu's picture

I was there, I wasn't one of the pumpers though. I didn't get burned/stung/whatnot. I did buy 1 oz at $40 but it had Ron's head on it and I was ok with that, still am. With his autograph it's worth more than it ever cost.

Wed, 10/01/2014 - 09:24 | 5274671 ShrNfr
ShrNfr's picture

So much for contracts and ex-ante law. Both no longer matter. The law of the land is now Calvinball.

Wed, 10/01/2014 - 09:27 | 5274685 deadelephant
deadelephant's picture

US is repaid for bailout of Fannie; US shares of Fannie lose millions in value.  Everywhere I look there is another financial merry-go-round.  Are there any trades left where huge entities aren't playing both sides against the middle? 

Wed, 10/01/2014 - 09:30 | 5274703 LULZBank
LULZBank's picture

Ackman herds, Icahn shoots.

Wed, 10/01/2014 - 09:33 | 5274716 Seasmoke
Seasmoke's picture

FUCK FANNIE. ZERO IS TOO HIGH A VALUE FOR THESE SCUMBAGS. 

 

FANNIE AND FREDDIE STEAL HOUSES THRU FORECLOSURES !!!

Wed, 10/01/2014 - 09:37 | 5274733 Spungo
Spungo's picture

After seasonal adjustments, the stock is up 10%

Wed, 10/01/2014 - 09:50 | 5274814 Roanman
Roanman's picture

Well done.

Wed, 10/01/2014 - 09:37 | 5274739 Seasmoke
Seasmoke's picture

Q. How did Ackman become a Millionaire ?

A. He started with a Billion !!

Wed, 10/01/2014 - 09:44 | 5274780 katchum
katchum's picture

Wasn't the fed going to sell all of its mortgages too?

Wed, 10/01/2014 - 09:54 | 5274838 buzzsaw99
buzzsaw99's picture

is your name goldman sachs?

i don't think so mother fucker

Wed, 10/01/2014 - 09:54 | 5274842 GFORCE
GFORCE's picture

Bill Ackman needs to quit wasting his life with slides and bad trades!

Wed, 10/01/2014 - 11:51 | 5275466 F0ster
F0ster's picture

He must have greased the wrong palms.

Wed, 10/01/2014 - 10:26 | 5275026 vyeung
vyeung's picture

60% enough to hurl his sorry arse out of the Empire State!

Wed, 10/01/2014 - 10:53 | 5275179 GrinandBearit
GrinandBearit's picture

If you are a billionare, why do you need/want more money?

Wed, 10/01/2014 - 11:42 | 5275427 Charming Anarchist
Charming Anarchist's picture

It is a cash-flow problem.

Wed, 10/01/2014 - 10:55 | 5275188 q99x2
q99x2's picture

Jump Ackman Jump.

Wed, 10/01/2014 - 11:07 | 5275237 JetsettingWelfareMom
JetsettingWelfareMom's picture

I fought the law and the law won...

Not enough lobbyists?

Wed, 10/01/2014 - 12:37 | 5275710 magne13
magne13's picture

If you own FNMA or Freddie, than you deserve to lose, the FEDs are going to wipeout equity holders and take them back, the conservatership is way too profitable to give up, so good luck, if you hold equity, you better start marking it at reality, which is ZERO.

Wed, 10/01/2014 - 12:37 | 5275711 magne13
magne13's picture

If you own FNMA or Freddie, than you deserve to lose, the FEDs are going to wipeout equity holders and take them back, the conservatership is way too profitable to give up, so good luck, if you hold equity, you better start marking it at reality, which is ZERO.

Wed, 10/01/2014 - 12:40 | 5275724 Quantum Nucleonics
Quantum Nucleonics's picture

The only reason that Fannie and Freddie still exist is to function as an off-balance sheet entity for the Obama Administration.  Had they liquidated them, all the debt goes to the national debt.  What a bunch of idiots to think there was even a penny of value in the equity!

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