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Joe Eifrid  

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  • Ackman takes big stakes in the GSEs [View news story]
    "My money is on the greedy forces of congress. "

    You mean as in caving due to the contributions to their campaigns from the hedge funds?
    Nov 15, 2013. 09:29 AM | 2 Likes Like |Link to Comment
  • Best Way To Trade The GSEs [View article]
    Fairholme Capital proposal
    http://bit.ly/19mQ3hd
    Nov 14, 2013. 08:51 AM | Likes Like |Link to Comment
  • Fairholme proposes $52B recap for GSEs: WSJ [View news story]
    Interesting read from Fairholme Capital
    http://bit.ly/19mQ3hd
    Nov 14, 2013. 08:11 AM | Likes Like |Link to Comment
  • Fairholme proposes $52B recap for GSEs: WSJ [View news story]
    Pssst....The outline...
    http://on.ft.com/1aFsjoQ
    Nov 13, 2013. 09:10 PM | Likes Like |Link to Comment
  • Fannie Mae earns $8.7B in Q3 [View news story]
    "I don't understand why I have to pay for the bad company in which you may own stock."

    I don't think we should either. But, I think all the shareholders want is a plan in place where they can exit conservatorship, pay back the US Treasury under reasonable terms, and start to be able to rebuild capital again. By March 31st of next year the government will have received back in net terms everything they lent out, and then some. There should be a fair return given for the use of the funds, but everything after that should go to the shareholders.
    Nov 9, 2013. 12:19 PM | Likes Like |Link to Comment
  • Fannie Mae earns $8.7B in Q3 [View news story]
    You may be surprised to know that S&P companies like DAL, AZO, DTV, LTD, MAR, PM are technically insolvent - assets less than liabilities. Fannie itself found it was technically insolvent in the early 80's when interest rates skyrocketed. There was no call for conservatorship back then. Sure Fannie and Freddie had their problems, but it did not help that the government was forcing them to make more and more loans to low income families, and also that the major makes put them on the hook for so many bad loans through weak leading standards. If these two companies would have been dissolved, it would have put the nation, and probably the world, in to a economic depression. Even here, 5 years later, there would probably still be no housing industry to speak of. I think all the shareholders want is equal treatment as they gave to C, BAC, AIG and many other banks.
    Nov 8, 2013. 07:55 AM | 1 Like Like |Link to Comment
  • Fannie Mae earns $8.7B in Q3 [View news story]
    Fannie and Freddie never went BK. They had a "mere" insolvency problem. They still had good cash flow that could have seen them through the mess. Look at FHA, they are just now talking about needing more cash 5 years out after the crisis. Nearly half of what FnF borrowed from the treasury at loan shark rates was the reversal of taking their deferred tax assets off the balance sheet. This threw them technically deeper into insolvency and the treasury forced them to borrow a similar amount to bring their net worth up to positive. The shareholders really got screwed and hopefully the shareholder lawsuits will rectify the problem.
    Nov 7, 2013. 03:49 PM | Likes Like |Link to Comment
  • Phoenix: A Stock Set To Rise From The Ashes [View article]
    I wrote this article two years ago. I own a little PFX myself, but have quit following the company.
    Oct 25, 2013. 06:48 PM | Likes Like |Link to Comment
  • Tesla Motors: Dilution Is Inevitable [View article]
    TSLA - Institutional ownership of TSLA stock has declined from $84% in Jan to 66% today - Merrill notes

    TSLA - '..now appears that retail investors are playing an increasing role in driving the stock price higher,' Merrill adds.

    '..and could be at risk when a correction, which we believe is long overdue, ultimately occurs. - Merrill.
    Sep 23, 2013. 09:26 AM | 1 Like Like |Link to Comment
  • Target Joins Netflix's List Of Competitors With Video Streaming Plans [View article]
    AMZN has 41,000 titles. How many does NFLX have?

    TIA
    Sep 5, 2013. 03:17 PM | Likes Like |Link to Comment
  • American Capital Agency's Mid-Q3 2013 Composition And Valuation Analysis - Part 2 (Derivative Portfolio) [View article]
    FWIW;
    SEC filings;
    http://1.usa.gov/18w037H
    Sep 1, 2013. 07:31 PM | 1 Like Like |Link to Comment
  • American Capital Agency Corp.'s Mid-Q3 2013 Composition And Valuation Analysis - Part 1 [View article]
    One difference between new homes sales and existing is that new home sales is forward looking. New homes sales count homes that came under contract. It is possible that the home hasn't even been built yet. This number is reported by the government.It is also more of a survey. http://1.usa.gov/18bP57a

    Existing home sales are for homes that have closed. That report comes from the National Association of Realtors. It is more of a lagging report as homes may not closed for 60 to 90 days after coming under contract.
    Aug 24, 2013. 08:17 PM | 1 Like Like |Link to Comment
  • Assessing American Capital Agency's Dividend Sustainability: 2Q13 Update [View article]
    I don't think that effects the mREITs. It will be the mortgage insurers (RDN, MTG, GNW, AIG, and others) that take the risk. Of course they will cover that risk in theory through guarantee/insurance fees. Those fees should be passed on to the homebuyers themselves through higher mortgage rates with the fees built in. In essence the mortgage insurers will be replacing Fannie and Freddie to some extent, with the government picking up where the insurers leave off.

    Fannie and Freddie gone could actually be good for mREITs.

    Gary Kain with AGNC touched on a world without Fannie and FReddie at the Barclays conference in May. I posted this before recently to another article asking about Fannie and Freddie. Thought it worthwhile in response to share again;

    "And so what we’re trying to show here is sort of a more normalized environment where let’s say interest rates, mortgage rates are 5% they could obviously be higher than that, they are actually now more like 3.5% and right now if you looked at margins over the past three years, they probably average closer to 2%, but let’s think about a world in the future where margins come in further and maybe they are a 100 basis points versus the 200 we have seen and even with maintaining leverage at ball park eight times as you can see you can get a gross ROE of 13% with that scenario and that’s still a reasonable kind of return picture in an environment where interest rates are a couple of 100 basis points higher and where the yield curve is flatter. Now the question is what was the 100 basis point margin attainable in that type of environment? yes that’s really sounds conservative relative to where you have been, but is that still a stretch and we don’t feel that way and in the past, in other flatter yield curve environments, it may have been more of a challenge to hit those kind of numbers and the reason it would have been a challenge was because of Freddie and Fannie and Freddie and Fannie’s portfolios could lever 40 to 50 to one.

    And so even a 50 basis point spread with 40 times leverage produced a 20% ROE. So with that in periods where interest rates were higher and the yield curve was flatter and there wasn’t a lot of mortgage production because there wasn’t a lot of refinancing activity, someone who could lever 10 to 1 couldn’t compete with a GSE that could lever 40 or 50 to one had favorable funding they could also fund 10 or 20 basis point lower and could lock in funding over a longer period of time.

    But now that GSEs are out of the picture not running for profit, portfolios are shrinking their, for-profit portfolios in an environment in the future, there is no one with the ability to lever considerably more than eight to 10 times and that’s of enough size to kind of to impact the market and so almost by definition, market pricing has to be consistent with where the next best fit is and so we feel we’re certainly in that category and so I think this is an important take away for people which is we don’t believe that the REIT is the agency mortgage REIT or the hybrid mortgage REIT business models are dependent on zero interest rates and a steep yield curve in the future and I think this will be one of the biggest surprises for people overtime and looking at the industry.so with that what are going to be the drivers of long term success and first of all like any investment business and that’s the business we’re in it comes down to asset selection."
    Aug 23, 2013. 07:48 PM | 3 Likes Like |Link to Comment
  • Western Asset Mortgage: Is It Time To Panic? [View article]
    What would you say is an acceptable current ratio for a mREIT?
    Aug 19, 2013. 09:35 PM | Likes Like |Link to Comment
  • Western Asset Mortgage: Is It Time To Panic? [View article]
    Gary Kain with AGNC touched on a world without Fannie and FReddie at the Barclays conference in May;

    "And so what we’re trying to show here is sort of a more normalized environment where let’s say interest rates, mortgage rates are 5% they could obviously be higher than that, they are actually now more like 3.5% and right now if you looked at margins over the past three years, they probably average closer to 2%, but let’s think about a world in the future where margins come in further and maybe they are a 100 basis points versus the 200 we have seen and even with maintaining leverage at ball park eight times as you can see you can get a gross ROE of 13% with that scenario and that’s still a reasonable kind of return picture in an environment where interest rates are a couple of 100 basis points higher and where the yield curve is flatter. Now the question is what was the 100 basis point margin attainable in that type of environment? yes that’s really sounds conservative relative to where you have been, but is that still a stretch and we don’t feel that way and in the past, in other flatter yield curve environments, it may have been more of a challenge to hit those kind of numbers and the reason it would have been a challenge was because of Freddie and Fannie and Freddie and Fannie’s portfolios could lever 40 to 50 to one.

    And so even a 50 basis point spread with 40 times leverage produced a 20% ROE. So with that in periods where interest rates were higher and the yield curve was flatter and there wasn’t a lot of mortgage production because there wasn’t a lot of refinancing activity, someone who could lever 10 to 1 couldn’t compete with a GSE that could lever 40 or 50 to one had favorable funding they could also fund 10 or 20 basis point lower and could lock in funding over a longer period of time.

    But now that GSEs are out of the picture not running for profit, portfolios are shrinking their, for-profit portfolios in an environment in the future, there is no one with the ability to lever considerably more than eight to 10 times and that’s of enough size to kind of to impact the market and so almost by definition, market pricing has to be consistent with where the next best fit is and so we feel we’re certainly in that category and so I think this is an important take away for people which is we don’t believe that the REIT is the agency mortgage REIT or the hybrid mortgage REIT business models are dependent on zero interest rates and a steep yield curve in the future and I think this will be one of the biggest surprises for people overtime and looking at the industry.so with that what are going to be the drivers of long term success and first of all like any investment business and that’s the business we’re in it comes down to asset selection."
    Aug 19, 2013. 09:30 PM | 1 Like Like |Link to Comment
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