Comments on: Preferred Shared Whacked in the Wake of Freddie, Fannie Bailout http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html Sun, 22 Nov 2009 06:06:33 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html#comment-14739 Anonymous Thu, 11 Sep 2008 11:51:00 +0000 http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-the-wake-of-freddie-fannie-bailout/#comment-14739 FNM is being allowed to pay their Q3 preferred dividend. This would ordinarily not be permitted in receiverships, in deference to debtholders being paid, but there is more discretion in conservatorships. Not enough to help preferreds generally and really just an outrangeous freeby to FNM holders with no benefits given the size of the government's rescue.<br/><br/>http://www.marketwatch.com/news/story/fannie-allowed-pay-third-quarter-preferred/story.aspx?guid=%7BB1D358BF-C343-4AF0-8861-E270F025BE46%7D&dist=msr_7. FNM is being allowed to pay their Q3 preferred dividend. This would ordinarily not be permitted in receiverships, in deference to debtholders being paid, but there is more discretion in conservatorships. Not enough to help preferreds generally and really just an outrangeous freeby to FNM holders with no benefits given the size of the government's rescue.

http://www.marketwatch.com/news/story/fannie-allowed-pay-third-quarter-preferred/story.aspx?guid=%7BB1D358BF-C343-4AF0-8861-E270F025BE46%7D&dist=msr_7.

]]> By: Lockstep http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html#comment-14711 Lockstep Thu, 11 Sep 2008 03:29:00 +0000 http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-the-wake-of-freddie-fannie-bailout/#comment-14711 Yves, great post. I am biased though because I went long Freddie Pref before the bailout with the same reasoning mentioned here.<br/><br/>Considering the hit to Wells Fargo, yet uncalculated hit to AIG, and unknown effect on foreign banks or entities that buy our debt, is there any chance Paulson could reverse this decision? Yves, great post. I am biased though because I went long Freddie Pref before the bailout with the same reasoning mentioned here.

Considering the hit to Wells Fargo, yet uncalculated hit to AIG, and unknown effect on foreign banks or entities that buy our debt, is there any chance Paulson could reverse this decision?

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html#comment-14703 Yves Smith Thu, 11 Sep 2008 02:45:00 +0000 http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-the-wake-of-freddie-fannie-bailout/#comment-14703 Matt,<br/><br/>Dizard is a journalist, not a fund manager, so "talking his book" has less significance than if it were, say, Bill Gross or Jim Rogers. I don't think Dizrd imagines that, even if he were long equities (most investors are), that his little pieces in the FT would make a difference as far as the performance of his position is concerned. Bottom calling is a popular sport, and if you are right, you look like a genius. <br/><br/>As for preferred stock, he was correct as far as the issues discussed in the section excerpted are concerned. The whole preferred market is being pummeled due to Treasury's actions, and that is to the detriment of the effort to recapitalize the financial system. Matt,

Dizard is a journalist, not a fund manager, so “talking his book” has less significance than if it were, say, Bill Gross or Jim Rogers. I don’t think Dizrd imagines that, even if he were long equities (most investors are), that his little pieces in the FT would make a difference as far as the performance of his position is concerned. Bottom calling is a popular sport, and if you are right, you look like a genius.

As for preferred stock, he was correct as far as the issues discussed in the section excerpted are concerned. The whole preferred market is being pummeled due to Treasury’s actions, and that is to the detriment of the effort to recapitalize the financial system.

]]> By: Matt Dubuque http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html#comment-14700 Matt Dubuque Thu, 11 Sep 2008 02:19:00 +0000 http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-the-wake-of-freddie-fannie-bailout/#comment-14700 Because Dizard was so forcefully in favor of saving the preferreds in MULTIPLE columns, it seemed to me he was clearly talking his book.<br/><br/>He refused to confirm one way or the other to me whether this was true, but it seemed he really lost all objectivity with this scenario. My judgment is that he likely lost a lot of money with such a foolish bet. He is just one of many who I'm persuaded will lose large sums underestimating the Federal Reserve's determination to protect the value of its Treasury holdings.<br/><br/>I've been a HUGE fan of Dizard's over the years, but lately he is not at the top of his game.<br/><br/>He has also stated emphatically within the last month (and repeated it less than a fortnight ago) that we are in a new bull market for equities in the USA.<br/><br/>That delusional comment is not even close to reality, and is a most disappointing (and horrific) mistake on his part.<br/><br/>Matt Dubuque Because Dizard was so forcefully in favor of saving the preferreds in MULTIPLE columns, it seemed to me he was clearly talking his book.

He refused to confirm one way or the other to me whether this was true, but it seemed he really lost all objectivity with this scenario. My judgment is that he likely lost a lot of money with such a foolish bet. He is just one of many who I’m persuaded will lose large sums underestimating the Federal Reserve’s determination to protect the value of its Treasury holdings.

I’ve been a HUGE fan of Dizard’s over the years, but lately he is not at the top of his game.

He has also stated emphatically within the last month (and repeated it less than a fortnight ago) that we are in a new bull market for equities in the USA.

That delusional comment is not even close to reality, and is a most disappointing (and horrific) mistake on his part.

Matt Dubuque

]]> By: doc holiday http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-wake-of.html#comment-14697 doc holiday Thu, 11 Sep 2008 02:08:00 +0000 http://www.nakedcapitalism.com/2008/09/preferred-shared-whacked-in-the-wake-of-freddie-fannie-bailout/#comment-14697 There it is again, i.e, that vague reference to the amount of money that has been flushed in this mess, but this time, it seems there is even less cash burn; thus, very strange (does someone have a comparative number on this subprime thing, because it seems like this fuel gauge has been stuck at $500 Billion for 8 months):<br/><br/>Re: The market's tumble is making it more expensive for banks and brokers trying to raise fresh capital after taking $506 billion of writedowns and losses on the collapse of the subprime-mortgage market.... There it is again, i.e, that vague reference to the amount of money that has been flushed in this mess, but this time, it seems there is even less cash burn; thus, very strange (does someone have a comparative number on this subprime thing, because it seems like this fuel gauge has been stuck at $500 Billion for 8 months):

Re: The market’s tumble is making it more expensive for banks and brokers trying to raise fresh capital after taking $506 billion of writedowns and losses on the collapse of the subprime-mortgage market….

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