Matthew Halbower on Fannie Mae, Freddie Mac Privatization, and US Steel Deal

US Steel Deal Success

• 🎯 Matthew Halbower discusses the successful closing of the Nippon–U.S. Steel deal, highlighting his role as the largest holder of US Steel.
• 🤝 He emphasizes the importance of collaboration with senators and the administration in Washington D.C. to ensure the deal's approval, noting the significant investment Nippon would bring.
• 💡 The introduction of a 'golden share' provision, borrowed from European practices, is identified as a novel element in the US.

Fannie Mae and Freddie Mac Privatization

• 🏦 Halbower expresses a strong belief that the government will privatize Fannie Mae and Freddie Mac, returning them to public markets.
• 📈 He discusses his investment strategy, favoring preferred stock over common stock due to perceived risks in the common shares.
• 💰 The primary risk identified for common stock is the potential for dilution stemming from the U.S. Treasury's senior preferred instrument, valued at several hundred billion dollars.
• 📜 Halbower references the 'Minutiae dilution solution' from the previous Trump administration as a likely precedent for how the senior preferred might be handled, potentially converting it into common stock.
• 🗣️ He notes President Trump's public statements and past letters indicating a commitment to releasing Fannie and Freddie from conservatorship, viewing the prolonged conservatorship as akin to socialism.
• 📌 Pentwater Capital holds a $1.3 billion face amount of Fannie and Freddie preferred stock.