Sunday, August 6, 2017

Bruce Brekowitz's comment on Frannie

Fannie Mae and Freddie Mac
After eight long years of cover-ups, bald-faced lies, and judicial obstruction, the government has nally released thousands of documents demonstrating that the Obama Administration created false pretenses to unlawfully siphon tens of billions of corporate cash from Fannie Mae and Freddie Mac. These documents clearly demonstrate that senior government of cials knew the GSEs were on the verge of sustained pro tability and took actions to usurp all of those pro ts. Indeed, the documents reveal that these of cials lied to the public and perjured themselves in federal courts. The so-called “Net Worth Sweep” was unnecessary to prevent a “downward spiral.” Put simply, we now have unambiguous evidence that the Obama varsity team knew what their statutory authorities were, willfully exceeded those authorities to steal billions of dollars from investors, and subsequently engaged in a cover-up to hide their wrongdoing.
When you follow the cash, it’s easy to see that Fannie and Freddie have generated hundreds of billions in pro ts, taxes, and consumer savings. Each held tens of billions of tangible value and maintained tens of billions in earnings power – even at the worst point of The Great Recession. Each had the wherewithal to pay all bills and pursue its stated mission of providing liquidity when all others cannot.
Federal agencies continue to defend contrived accounting gimmicks by arguing that they followed the law and, notwithstanding, they are above it. As more and more documents are released, the Department of Justice will see that the actions undertaken by former of cials undermine their defenses and long-established laws. Fannie and Freddie can safely return to their role of insuring the uniquely American housing nance system against catastrophic risk with private capital. There is a proven blueprint to succeed, and we hope to successfully resolve this matter before reaching the Supreme Court of the United States.
After all, capital markets are based on the sanctity of contracts – the original buyers’ and sellers’ expectations and rights travel with a contract no matter who holds it. When this saga ends, we expect contracts to be honored and substantial value for all stakeholders. 

Monday, April 17, 2017


From Horizon Kinetics' 4Q16 conference call last January in regards to Bitcoin:

In conclusion, we’re not recommending that anybody run out and put 10% of their portfolio into it. But a very small portion of your assets in this, in success mode, could actually have a very favorable outcome for your total returns, looking out over an extended period of time. Therefore, I believe that the upside potential is so enormous that you’d be foolish not to have some. I think it’s more imprudent not to own it than it is to own it.

Friday, April 14, 2017

Intrexon - Potential Black Swan Stock

check out Bill Miller's comments starting at the 19:00 minute mark

Has the potential to be the largest market cap company in history.

Saturday, August 27, 2016

Potential Black Swan Stocks - Fannie & Freddie

Bill Ackman's 2014 presentation values FNMA & FMCC at $23 per share using the current G-fees of 60 basis points.  With Fannie & Freddie both trading under $2.00 per share you could make over 10x on your money.  However, his presentation assumes that the government's warrants are exercised.

The Michael Krimminger amicus curiae states "[A]lthough the government is entitled to be repaid amounts that it provides the institution during conservatorship, once it has been repaid with interest, it is entitled to no more."  I estimate that Fannie & Freddie will have repaid the government with interest around YE2017.  After that, I believe that the warrants can no longer be exercised. That would bring Ackman's calculation of intrinsic value up to $115 per share.

However, Ackman's presentation assumes a 2.5% capital ratio, and that it will be built up by YE2024 through retained earnings.  My guess is that there will be an equity raise (dilution) to achieve adequate capital levels more quickly.

Saturday, October 10, 2015

Five Global Catastrophies That Could Happen Tomorrow

1) Indonesia's forgotten supervolcano

2) The Hilina Slump
          Big Island of Hawaii could drop 12,000 km^3 of rock into the Pacific Ocean

3) The North Sea Tsunami
          submarine landslide from submarine glacial deposites

4) The Cascadian 'Big One'
          massive earthquake from the subduction zone off of N. American west coast running from northern California to Vancouver Island

5) An extra-terrestrial threat
          another Carrington event