17. Februar 2016

Berkowitz - Fannie, Freddie & Öl / Gas

Bruce Berkowitz hat seinen Letter 2015 veröffentlicht und noch einmal zu Fannie Mae und Freddie Mac Stellung genommen. Außerdem scheint er über die Hälfte seiner Bank of America Beteiligung verkauft zu haben.

Zwei neue Investments die er eingegangen ist habe ich ebenfalls auf der Watchlist: Now Inc. und MRC Global. Das Geschäftsmodell sieht interessant aus - ich glaube allerdings, dass es noch etwas zu früh ist um dort einzusteigen. Es ist aber gut zu wissen, dass Berkowitz dabei ist.

Aus dem Brief:

Fannie Mae and Freddie Mac

In 1986, famed Magellan Fund manager Peter Lynch touted Fannie Mae as “the best business, literally, in America.”  At that time, Fannie Mae had a price-to-earnings ratio of one.  Lynch noted that “when a company can earn back the price of its stock in one year, you’ve found a good deal.”  Thirty years later, the price-to-earnings ratio of Fannie Mae is back at one – but the circumstances are quite different.  In our view, current prices of Fannie Mae as well as its smaller cousin Freddie Mac do not reflect the economic value of existing assets, let alone future earnings power, embedded in these world-class franchises.  Indeed, the companies are not priced for a run-off of their existing businesses; they are priced for the permanent expropriation of all assets.

Fannie Mae and Freddie Mac represent 16.4% of Fund assets, primarily in the form of preferred stock.  For those unfamiliar, Fannie Mae and Freddie Mac are simple and straightforward insurance companies.  They are not banks.  There isn’t a local Fannie Mae or Freddie Mac branch on the street corner.  Unlike the big banks, Fannie Mae and Freddie Mac did not commit any consumer fraud in the run-up to the financial crisis.  The two do not originate mortgages and they do not deal directly with individual homeowners.  However, when it comes to funding our nation’s housing market, Fannie Mae and Freddie Mac are mission critical.  The companies have helped tens of millions of American families buy, rent, or refinance a home even during the toughest economic times when banks and other lenders shun mortgage risk.  Bottom line: Fannie Mae and Freddie Mac are the housing finance system in America, and earn a nominal amount (less than 40 basis points) for ensuring that the venerable 30-year fixed-rate mortgage remains widely accessible and affordable.

During the 2008 financial crisis, Fannie Mae and Freddie Mac helped save America’s home mortgage system and resuscitated our national economy by continuing to provide liquidity when credit and insurance markets froze solid.  According to a comprehensive analysis by Thomas Ferguson and Robert Johnson published in the International Journal of Political Economy, federal regulators explicitly directed Fannie Mae and Freddie Mac to initiate massive purchases of “home mortgages and mortgage bonds to stem declines in those markets and alleviate pressures on the balance sheets of private firms,” particularly “overburdened banks.”  Then in 2012, Treasury’s decision to usurp all of the profits from each company in perpetuity (the so-called “Net Worth Sweep”) improved the federal budget deficit in an election year and avoided protracted debt ceiling negotiations with Congressional Republicans.

Roger Parloff’s recent Fortune magazine piece – “How Uncle Sam Nationalized Two Fortune 50 Companies” – details the de facto nationalization of Fannie Mae and Freddie Mac by the federal government and the determined effort by a handful of bureaucrats to hide the truth from the public:

For reasons that remain shrouded in secrecy to this day, the Treasury Department and the companies’ conservator, the Federal Housing Finance Agency (FHFA) – two arms of the same government – agreed to radically change the terms of what the GSEs would owe in exchange for the moneys they had already received.  Instead of a 10% annual dividend on all the bailout funds drawn … the dividend was now to be set at 100% of each GSE’s net worth.  One hundred percent.  That is to say, any and all profit they posted.  And this would be so in perpetuity ... The two firms, on their way back to health, were effectively nationalized.  The sudden change was called the “third amendment,” an innocuous-sounding designation that belies its momentous consequences … If this strikes you as, well, un-American, you’re not alone … The government’s alleged nationalization of two enormous corporations raises potentially landmark constitutional issues – comparable to President Harry Truman’s attempt to nationalize steel mills during the Korean War … Seven years into their conservatorship, the GSEs remain adrift, with shrinking capital reserves and no exit plan—a dormant, festering crisis … Documents and depositions from officials at Treasury and FHFA, obtained in discovery in a suit brought by Fairholme Funds, show that the government’s story is “highly misleading” in some respects and “outright false” in others, plaintiffs lawyers allege in court briefs … The lawyers can’t tell the media (or even their clients) specifically what the documents and depositions show, however.  That’s because Court of Federal Claims Judge Margaret Sweeney has ordered those materials sealed from public view, at the government’s behest.  Bewilderingly, the Justice Department has persuaded her that disclosure of that information—concerning a now three- to eight-year-old decision-making process of tremendous public interest—might cause “dire harm” and “place this nation’s financial markets in jeopardy” … The spectacle of a conservator wiping out shareholders just as the companies he’s supervising are about to have their best years in history simply doesn’t smell right.  It’s hard to picture the Supreme Court letting it stand.

The market gyrations experienced during 2015 do not reflect our progress in halting Treasury’s unlawful taking of Fannie Mae’s and Freddie Mac’s assets.  Indeed, newly discovered evidence – which shows the government’s defense to be outright false – was subsequently presented to the D.C. Circuit Court (under seal as required), and plaintiffs in other cases from the Northern District of Iowa to the Eastern District of Kentucky have now obtained these documents as well.  We remain confident that Treasury’s deliberate effort to realign the equity of each company and allocate all profits to itself in perpetuity is strictly prohibited by federal and state law, and anticipate that several of these cases will be adjudicated this year.

Today, taxpayers own 79.9% of Fannie Mae and Freddie Mac.  In this respect, taxpayers are fully aligned with private shareholders of these extremely valuable companies.  In our view, anyone claiming that shareholders are seeking remuneration at “taxpayer expense” is peddling fiction.  Only the disingenuous would assert that recapitalization of these companies would take decades and come at taxpayer expense, as if retaining earnings precluded the ability of each company to raise equity from private investors.  Only those beholden to special interests would ignore the substantial reforms implemented at Fannie Mae and Freddie Mac over the last eight years and pretend that the companies are somehow doomed to repeat the past upon release from conservatorship.  Only those who oppose the dream of American homeownership would attempt to dismantle President Franklin Roosevelt’s New Deal by eliminating two publicly traded, shareholder-owned companies that have single-handedly provided $7 trillion dollars – yes, trillion – in liquidity to support America’s mortgage market since 2009. 

Shareholders simply request that the Treasury Department respect the capital structure of each company, respect the economic bundle of rights associated with our securities, and respect the law setting forth the rules of a conservatorship as decreed by Congress.  The economist Herbert Stein once famously said: “If something cannot go on forever, it will stop.”  Sooner rather than later, we believe the Net Worth Sweep will be halted and a common sense solution will prevail: Fannie Mae and Freddie Mac will transform into low-risk, public utilities with regulated rates of return, just like your local electric company.


Oil and Natural Gas Related Companies

A shale fracking revolution allows America to be an energy exporter.  Supply increases have led to an oil and gas price collapse.  Energy companies now sell for huge discounts from historic values, and related service businesses are trading at record lows as well.  When the Fund last purchased large amounts of securities in the energy sector, no one thought that the world would function if oil exceeded $40 per barrel.  We sold our positions when oil eclipsed $100 per barrel and few thought a return to $80 possible.  Now, experts believe a price of $10 is possible and $50 per barrel a long way off.  We again disagree.  Prices cannot stay below marginal costs when demand grows and supply depletes – at least, not for too long.

In the immortal words of Yogi Berra, “It’s déjà vu all over again.”  Common shares of MRC Global and NOW Inc. comprise 4.8% of Fund assets.  Both companies operate in the supply chain and inventory management industry, and should be among the first to experience a rebound with higher oil and gas prices.  Ultimately, MRC and NOW should consider a merger in order to create huge efficiencies and maximize value for all shareholders. 

Der komplette Brief kann hier nachgelesen werden:

3 Kommentare:

  1. "Prices cannot stay below marginal costs when demand grows and supply depletes – at least, not for too long."

    Genau dieser eine Satz bringt meine Sichtweise auf den Ölmarkt auf den Punkt. Viele übersehen scheinbar, dass die bestehenden Ölquellen pro Jahr mehrere Prozent an Ergiebigkeit verlieren.

  2. Ich widerspreche dir nicht. Ich glaube nur, dass es etwas länger dauern wird, als viele glauben. Ich kann mich natürlich täuschen ;-)


  3. Naja, die überwiegende Mehrheit glaubt ja ganz offensichtlich, dass es sehr lange dauert. Ansonsten wäre der Preis nicht dort, wo er jetzt ist.