

Discover more from Kaoboy Musings
GSE Update -- COFC Hearing
I guess I should have waited one day before hitting “send” on yesterday’s missive, but since this is timely, I wanted to share this ASAP.
Of the myriad lawsuits against the Treasury/FHFA by different classes of GSE investors, one very important hearing regarding the government’s motion to dismiss in the Court of Federal Claims (COFC) was held yesterday.
While I don’t have the full transcript yet, I’ve heard several key soundbites from the presiding Judge, Margaret Sweeney, that appear quite positive for plaintiffs (shareholders):
She was concerned that the current terms of the Net Worth Sweep would never allow the GSEs to become solvent and exit conservatorship, and she questioned how the government could justify never allowing repayment of the liquidation preference so that the companies can get back on their feet
She opined that Treasury/FHFA placed the GSE’s in a “death grip” and used them as a “piggybank,” comparing government’s actions to “the mob”
She opined that a “reasonable investor” would not have expected all profits to be swept to Treasury forever
While these soundbites appear way more constructive than I expected, I caution that the wheels of justice have moved very slowly in these GSE cases. Nevertheless, if the COFC strikes down the government’s motion to dismiss, it will add to the political cover that Mnuchin/Calabria need to do the right thing for shareholders. Stay tuned…
Copyright
© 2019-2020 Akanthos Capital Management, LLC. All rights reserved. Protected by copyright laws of the United States and international treaties. This website may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Akanthos Capital Management, LLC.
About
Kaoboy Musings is a private distribution list/blog that I created to encourage dialogue regarding the economy & markets, geopolitics, investment ideas, and life in general. I have a passion for the markets and investing, and even though I no longer accept investor capital, I try to keep current on global events and opportunities and remain active in the markets. I’ve always found that writing my ideas down, sharing them with smart people, and encouraging two-way discourse and devil’s advocacy is often the best way to validate or invalidate a thesis and stay mentally flexible.
Disclaimer
Akanthos Capital Management, LLC (“Akanthos”) is an exempt reporting investment adviser with the state of California. This message is for informational and professional purposes only, cannot be distributed without express written consent, and does not constitute advice, an offer to sell, or a solicitation of an offer to buy any securities and may not be relied upon in connection with any offer or sale of securities. The contents of this messager should not be relied upon in making investment decisions. The information and statistical data contained herein have been obtained from sources that we believe to be reliable but in no way are warranted by us as to accuracy or completeness. The accompanying performance statistics are based upon historical performance and are not indicative of future performance. The types of investments discussed do not represent all the securities purchased, sold, or recommended for clients. You should not assume that investments in the securities or strategies identified and discussed were or will be profitable. While many of the thoughts expressed in this message are stated in a factual manner, the discussion reflects only Akanthos’ beliefs about the financial markets in which it invests portfolio assets. The descriptions herein are in summary form, are incomplete and do not include all the information necessary to evaluate an investment in any investment or strategy.