Fannie Mae and Freddie Mac allowed to boost their capital

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Whitney Tilson’s email to investors discussing Fannie, Freddie Allowed to Boost Capital Buffers by Billions; How I managed risk; How to invest like Warren Buffett; Warren Buffett Protege to Leave Berkshire, Start Own Firm; Class participation strategy No. 3.

1) Good news this morning for government-sponsored entities Fannie Mae (FNMA) and Freddie Mac (FMCC), as the Treasury has effectively ended the illegal “net worth sweep“: Fannie, Freddie Allowed to Boost Capital Buffers by Billions – Bloomberg. Excerpt:

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The agencies said they may make additional tweaks to Fannie and Freddie's capital structures, as well. The moves are all part of an effort – outlined in a plan released by Treasury earlier this month – to end the companies' decade long conservatorships and return them to the private market.

In the category of speculative investments – meaning positions sized 3% or smaller – Fannie Mae continues to be my favorite.

2) In this video from one of my seminars a year ago, I answered a student's question about How I Managed Risk (5:02).

3) I'm quoted in this CNBC article on How to invest like Warren Buffett. Excerpt:

Former hedge-fund manager and Buffett follower Whitney Tilson attributes the 89-year-old's success to his "off-the-charts smarts," his more than seven decades of experience and his temperament.

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However, don't invest everything Buffett-style, warned Tilson.

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So, if you want to invest like Buffett, do it with 10%, 20% or 30% of your total investments and put the rest in an index fund, he said.

4) I wish Tracy the best and am sure she'll be successful: Warren Buffett Protege to Leave Berkshire, Start Own Firm. Excerpt:

Tracy Britt Cool, one of Warren Buffett's key lieutenants in recent years, is leaving Berkshire Hathaway to create a mini Berkshire of her own.

Ms. Britt Cool joined Berkshire in 2009 at age 25 as Mr. Buffett's financial assistant, a job he created for her. In 2014, she became chief executive of Pampered Chef, a cookware company owned by Berkshire.

5) Here's my third strategy for winning the class participation game:

  1. Don't speak in the first half of class.

In general, the professor uses the first half of every class to establish the facts of the case, while the real analysis occurs near the end. Let your classmates make "chip shots" that merely demonstrate that they read the case, while you demonstrate sophisticated thinking during the meatier discussion in the second half of each class.

Best regards,

Whitney