Fannie Mae (FNMA)

[Mathan22]

WATER STONE & US DEPARTMENT OF TREASURY TARP OFFERING OVERVIEW

This is from the Yahoo board:

http://finance.yahoo.com/mbview/threadview/;_ylt=AgVNLRwzIksZXrBUJunxOa3eAohG;_ylu=X3oDMTB2cjZ1YzF1BHBvcwMzNwRzZWMDTWVkaWFNc2dCb2FyZHNYSFJVbHQ-;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3?&bn=e0e2b58d-64fb-37a2-9273-29a5ce093d80&tid=1396865157146-32ef23d7-9ad2-4747-82ff-7f503dbf472a&tls=la%2Cd%2C6%2C3


This was a TARP OFFERING LISTED ON NASDAQ ( FNBN) closing price on dec 22, 2011 11.51
Warrants were issued to certain hedge funds from this offering and the two largest holders were WATER STONE AND THE US DEPARTMENT OF TREASURY.

THE KEY ISSUES WITH THIS OFFERING ARE IN THE PLAN OF DISTRIBUTIONS
In connection with the sales of this common stock, the selling shareholders may enter into hedging transactions with broker dealers or other financial institutions which may in turn. ( MEANS could sell these securities and use of funds can be for the following)

1. ENGAGE IN SHORT SELLING OF THE COMMON STOCK IN THE COURSE OF HEDGING THIER POSITION
2. SELL THE COMMON STOCK SHORT & DELIVER THE COMMON STOCK TO CLOSE OUT SHORT POSITIONS.
3. LOAN OR PLEDGE THE COMMON STOCK TO BROKER DEALERS OR OTHER FINANCIAL INSTITUTIONS THAT MAY IN TURN MAY SELL THE COMMON STOCK
4. ENTER INTO OPION OR OTHER TRANSITIONS WITH BROKER DEALERS OR OTHER FINANCIAL INSTITUTIONS THAT REQUIRE THE DELIVERY TO THE BROKER DEALER OR OTHER FINANCIAL INSTITUTION OF THE COMMON STOCK, WHICH THE BROKER DEALER OR OTHER FINANCIAL INSTITUTION MAY SELL UNDER THE PROSPECTUS.
5. ENTER INTO TRANSACTIONS IN WHICH A BROKER DEALER MAKES PURCHASES AS A PRINCIPLE FOR RESALE FOR ITS OWN ACCOUNT OR THROUGH OTHER TYPES OF TRANSACTIONS.

The above allows someone to have these securities to take risks out side of this security but have these as back up protections. To pledge these in the place of others to gift these as replacement of short stock.

These all pertain to the use of common shares as a back up hedge.

Water stone could ( SHORT FANNIE FREDDIE STOCK) pledge these securities as a back up that the broker dealers could use to call on the losses of the short of Fannie and Freddie,

WATER STONE COULD LEGALLY SHORT FANNIE AND FREDDIE WITH OUT NEEDING TO DELIVER REAL FANNIE OR FREDDIE STOCK BY USING THESE TARP WARRANTS AS COLLATERAL FOR LOSSES THAT MAY BE INCURRED THROUGH THE USE OF HEDGING,

Sad the US DEPARTMENT OF TREASURY JUST HAPPENED BY CHANCE ISSUE TARP WARRANTS TO THE LARGEST SINGLE SHORT SELLER OF FANNIE & FREDDIE ( where as they could use those warrants to convert to common stock ) in tarp funds as collateral for shorting other companies common stock. shocking to say they would never had to deliver the short common stock to the broker dealer of FANNIE OR FREDDIE ( but use these as replacement should THIER bets be called)!

There was no risk folks for WATERSTONE to short stock up to the point of the value of these tarp warrants.

So yes they could show a loss on shorting FANNIE & FREDDIE BUT THEN SHOW A GAIN ON THESE SECURITIES AS AN OFFSET ( NOT HAVING TO BE TOLD THAT IN PUBLIC)

Thanks tarp funds! Good use of tax payer money!!! "