I would say what about the risk. As Rosen pointed out even Judge Lambreth would seem to have put the government on notice that there is going to have to be some payout on liquidation. In that scenario the pfd might double and the common might drop 50 %. or more.
I would also say for some reason the Congress seems to have vendetta against fnf. Yes I know they hold the warrants and 79.9% , but I would not rule out big capital requirements or some fees imposed that would reduce earnings going forward. These guys constantly amaze me with their lack of logical thinking. If they keep fnf with much higher cap requirements and utility pricing, I wonder if you are going to get that much more than 15-18. I can get the same upside with less risk in the $ 50 pfds going for less than 7.
I have made the argument for the common on this board. The big difference was the common was under 30 cents, the 50 pfds were about 2-3 November 2012 and even 4 in February 2013. The risk /reward ratio is much better than it's been in years in favor of the pfd. Don't think Bill Ackman and Icahn can't figure that out. Icahn has lots of experience buying distressed debt and so has Ackman. Just as an example, Ackman bought many levels of the debt structure , not just equity in the Bankruptcy of General Growth properties. I wonder if he has to disclose anything if he buys more than 10% of the pfd.
As I said before I think the drop in the levels of pfd relative to common has been caused by leveraged funds on the wrong side of an arbitrage position. Once this mini-long term capital situation is cleared up, I think the pfd will out perform. When is the big question.
