The Document Publicity Committee: Fannie Mae and Freddie Mac Shareholders' Strategy

Long only, deep value, special situations, growth

Summary

The problem of Fannie Mae and Freddie Mac is an issue of property dispute. Trump's coming to the power changes the situation, which becomes favorable to shareholders. Recommend a two-step strategy be adopted: Shareholders work hard to make all those document held by government to be released first. Only after that, do we handle any other things.

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Seeking Alpha is a very good forum for Fannie Mae and Freddie Mac shareholders. Out of concern, the Fannie Mae and Freddie Mac (the two companies’ name will be abbreviated as FnF in later part of this article) shareholders here have been heatedly discussing the issues like FnF privatization and the companies' recapitalization. There are all kinds of plans, whether it's a legal solution or a political settlement with the government, range from the extremely pessimistic to extremely optimistic. I have an impression that the shareholders here are like a batch of blind people trying to describe the shape of an elephant according to their hand touch. Whereas what will be the final result can hardly be determined. I believe that all sides concerning to the FnF issue will like to or at least claiming that they are happy to see a fair solution to settle the property dispute. How can a fair settlement for FnF problem to be achieved? I think this must be done in a two-step walking way. First of all, the truth concerning to FnF happened in the past 8 or 9 years must be surfaced i.e., completely up above the water surface, so that everything is under the sun light to be seen clearly by all sides.

Only when the truth is made public, can the second step that is a fair settlement for FnF issue be walked out. Actually the second step is a natural thing.

At present the key obstacle to the settlement of FnF issue is Obama administration insists that they have the privilege to keep those more than 11000 documents secret. It is just because these documents are not made public, will there guesses unfavorable to government’s moral fame. In this respect, the accounting fraudulence law suit case reported by Mr. Glen Bradford is one version (see Mr. Glen’s article   100% Of The GSEs For Zero Consideration Is Great For Tax Collectorsas follows:                       http://seekingalpha.com/article/4002690-100-percent-gses-zero-consideration-great-tax-collectors) and the fraudulence case of  (TBTF) bank's bailout written by Mr. Charlie Harrison (see his article                                             Fannie Mae: Why I Sold The Preferred And Own The Common asfollows: http://seekingalpha.com/article/4030454-fannie-mae-sold-preferred-common ) is another version. If I now ask Obama whether these two stories is true or not, sure enough he will angrily tell me that they are all vicious political rumors and slander. But any slander can be stopped by transparency. Unfortunately, Obama would rather endure the very unfavorable slander surrounding him than willing to let the truth be seen by the public. He works crazily hard to keep those documents a mystery to outside world. Of course that gives us various imaginations.

There is a view that we should fully utilize government's strong desire of keeping those documents secret to bargain with the government so as to reach a political solution favorable to FnF shareholders. To say it in another way, that whether to cover the truth or not itself can be a chip for bargaining with the government to protect the interests of shareholders. I do not think this is a wise strategy. Actually the counterpart we are facing to negotiate is a group of crazy liars. Politicians are all professional in lying. We are not as smart as them. In case when truth is fully hidden, an agreement reached with those politicians might mean: after you yourself to be completely sold out and you still happily help them count the money.

Up to now, US public opinion is not friendly to FnF shareholders. In this Seeking Alpha circle, the people here all know who is thief of FnF, who are victims, and what is Fannie gate. But if you jump out of this small circle, almost all of the people in United States believe that FnF shareholders are a group of thieves, if they achieve their purpose, the American tax payers will become innocent victims. Imagine in such an atmosphere of public opinion, and even go a step further, you yourself help the government to cover up the truth, can you still be able to negotiate with government to achieve a FnF solution favorable for the interests of shareholders? Anyway it doesn't make any sense for bargaining chip idea.

In fact, whether the truth concerning to FnF can be covered up or not reflects the rule game between shareholders and the government. Allowing those more than 11000 documents always be in a hidden state means that this is a shooting race between a blind man and a non-blind man. Of course, who will win the competition is self-evident. Therefore the secret privilege insisted by Obama administration is definitely an overlord term. Why can Obama be so overbearing? This is because that there are troops, police and so many nuclear warheads behind him, while on our small shareholders’ side, we have only got a mere meat, bones and blood. If fighting really happens we are certainly defeated by Obama. Luckily, now I tell you a secret: Obama will soon step down. With Obama and his Treasury Secretary Jack Lew stepping down, the two guys will no longer be able to bully us.

In addition, I would like to disclose a small secret: After several days the person who will replace Obama as President of Unite States is a very big business man whose name is Donald Trump. Being a business leader, of course he firmly believes that private property is sacrosanct. And some of his good friends, such as Carl Icahn and John Paulson, are also FnF shareholders. Taking into account his basic philosophy of life, moral integrity and sense of obligation between friends, President Trump will certainly be far more friendly to FnF shareholders as comparing with Obama. Moreover, Trump's most important economic policy is to encourage American multinational corporations all over the world to let their capital flow back to US so as to revive American economy and create more jobs. Under this big background, if Trump continues to adopt the Obama administration's attitude to  FnF shareholders, i.e., to treat private property as rubbish, then I'm sorry, other business leaders including those leaders of multinational corporations will also relentlessly treat Trump he himself and his policy as rubbish. This is a kind of reciprocal interaction between two sides. Therefore, the settlement of FnF property dispute concerning to the interests of shareholders is not an isolated issue. It will have a big repercussion to American economy and society. Because the image of Trump himself, whether it is attractive or not to business community is so important that it can be a touchstone to test whether or not the American global capital can be successfully attracted to flow back to US. Trump is a very smart business man, i.e., he is particularly good at calculation. I believe that Trump is highly qualified to handle the FnF property dispute based on the priorities of different interests.

Obama and Trump these two guys are completely opposite in ideology. Obama is a liberal leftwing socialist. That is why his administration treats FnF shareholders very cruelly and it also played unfair with AIG, GM, Chrysler, etc. Actually Obama let US, this very large country, learn from its small neighbor Cuba. On the contrary, Trump is a fundamentalist capitalist. His cabinet is mainly consist of business leaders and will become a most pro-business cabinet in American history. Imagine if Trump does not respect FnF shareholders' interest, how will the other business leaders think? They will think even the most pro-business Trump administration does not respect private property right, how can they believe that invest money in America is safe and no danger? All of these people are not foolish. This is what we call investment environment! The American business community will judge Trump by deeds rather than words.

Thus, the fact that Trump comes to the power is certainly a significant positive to our FnF shareholders. Whether or not a big pie will fall from the sky? Now it seems that this is possible. But will the pie directly fall to our feet? This requires our investors to work together to guide the pie's dropping track.

During Obama administration, the FnF shareholders have been fighting hard to protect their legal right and interests. After Trump comes to the power, should shareholders take a rest for relax? The answer is negative. This is because that the above analyses might be over optimistic, might be wrong, even if there is no mistake, Trump himself might not be so smart in calculation, and President Trump might probably be a stingy iron cock. Moreover, being President of United States, Mr. Trump faces strong pressure from the public opinion and American people to ask him to be an iron cock so as to protect the so called "state-own asset". The property dispute of FnF issue is a political problem, while political problem is like a mechanical phenomenon. President Trump is a man standing in the middle of political seesaw. If our opponents give too much pressure to Trump, and our side is too polite to give Trump any pressure, then this political seesaw will certainly tend to unfavorable to our side. Because Uncle Trump is being kidnapped by our opponent that he can do nothing good for us.

  In fact for our FnF shareholders, Trump's coming to power is a century opportunity. The amount of gold content for this opportunity depends on whether we have fully prepared or not. In other words, when such opportunity comes to us, can we grip it firmly or just let it fly away. How can we seize it tightly? First of all, as FnF shareholders we are not just bystanders, we must do something to participate in the struggle to protect our interests. If we are not lazy enough and willing to do something, then we should know what things we can do and what is the correct strategy for us to adopt. I think the correct approach is the two-step walking strategy as mentioned above in this article. Now I repeat the strategy: The first step, make the truth (what really happened in the past for FnF) clear to all people. In other words, to force the government to have those held secret documents all released. Only when the truth is totally surfaced, which can be seen clearly by all sides do we go further to start the second step, i.e., to explore and design the FnF settlement. To say it in another way, we should focus our fire only on the release of those documents. If this difficulty is successfully overcome, all the other "remuneration" can be secured. In order to win this battle, I suggest that shareholders of FnF should unite together and set up their own organization to give government pressure. The name of this organization can be "Truth Committee" or more specifically, "Document Publicity Committee", which is in the title of this article.

Turning to the external environment that we face now, since Obama administration has done a lot of dirty things harmful to FnF shareholders, Obama himself surely has a strong desire to cover the true history. Moreover, being President of United States, he has the "resource" to cover the history. However with President Obama step down, the "resource" he enjoys will no longer exist. The stinky, dirty history of the past concerning to FnF is only a negative asset to Obama administration and has nothing to do with new President Trump. Moreover, the personal relation between Trump and Obama is very poor. Being President, Trump surely has the resource, but whether Trump will utilize his resource to cover this stinky history for his political enemy Obama is highly suspected. At least, Trump is far less likely than Obama to have that strong will and impulse to cover the history. This shows that when situation changes, with Obama's step down and Trump's come to power, our two-step strategy will become more feasible, more efficient and have high chance to win.

So when Trump comes to power, the first thing our Document Publicity Committee has got to do is to respectfully send our petition to dear President Mr. Trump, ask him to kindly release all those held documents which is more than 11000 in total. I predict that President Trump will not quickly satisfy our request. At least he will let his people read those documents first to satisfy his curiosity before making any decisions. Then he may delay and just do nothing. This is because Trump is also facing pressure from our opponent's side which requires him to be an iron cock to protect the state-own assets. At the same time, Trump's Treasury Secretary will sell us his FnF privatization program. In this regard, we have got to give the Secretary a clear answer: Before all those held documents to be released, any programs are not considered. After waiting a period of time our Document Publicity Committee will respectfully send our second petition to President Trump. And so on like this from time to time, we will politely submit a petition to President Trump. On the other hand during this stage of waiting period, I will trouble the Document Publicity Committee to efficiently organize our brothers here to do a little bit "unscrupulous" small thing: We spread a hearsay through all kinds of possible media and channels towards the American business community, that President Trump is using his power to cover the dirty history of his predecessor Obama which greatly violates the property rights of FnF shareholders. Trump refuses to hand out those government held documents concerning to FnF.  We will try our best to efficiently make this story become a topic of hot discussion among all the friends in American business community. Because I am sure that the big ears of our great leader President Trump is extremely sensitive to such unfavorable rumor. So after we play like this, our pressure against Trump will suddenly be skyrocketed. Mr. Trump is not afraid of us, but he will surrender to the pressure of public opinion that against him from the whole American business community. In fact, I believe that Mr. Trump, from the bottom of his heart, really does not want to make it difficult for us, however, in order to balance the strong opposition from the other side, he has to make himself looks as if he is an iron cock. This is what we call politics.

Last warn: A lot of things need to be done in a correct order. If you wear shoes the first, then wear the socks, the results will be very painful.

The "story" above is my plan. However, according to Trump's strong personality (which means doing things stubbornly whenever he thinks correct), he will do not care any strong opposition from outside. So he will make all those held documents open to the public soon after he becomes the President, just to let Obama lose face. This is more favorable to us. Anyway, good plan is always a little bit "pessimistic", just to prepare well to give proper response in case the potential risk or unfavorable situation occurs. This is also a principle for people to play chess: prepare the worst, while welcome the best.

Great luck to all of us!

Disclosure: I am/we are long FNMA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Another version of this article is as follows:

http://seekingalpha.com/instablog/34572445-zhugang18-hotmail-com/4953454-document-publicity-committee-fannie-mae-freddie-mac-shareholders-strategy