Fannie Mae (FNMA)

[contrarian bull]

The ideal turnout if this were to happen would be that the price drops enough from the dilution that the company can buy the shares back as you indicated happened in other instances.

Technically the share price has already been diluted by those warrants. Everyone knows they are out there and that they will most likely be exercised, so they are already priced in. Some think they will be reduced by 50% as often has happened with similar bailouts, and some think they will be forgiven or invalidated by some court, so they are not priced in at 100%. So if they are exercised the drop will be relatively minor - maybe a 50% price drop. And if they are forgiven the stock will jump - but probably only 2x or 3x.

Of course if they are invalidated by a court probably a lot of other good stuff will happen for F&F so such a ruling in total would probably result in a 5-20x jump. And if they are exercised it means the senior preferred have been retired and the NWS has ended, so that will have a much bigger upside effect. Ahh it's all in the odds. Having a niece who is an actuary has not helped me with this so far... (working for AIG no less!) It's hard to put solid odds on the whims of courts or congress. It's easier to predict losses from future hurricanes.

And to answer rek - the f&f warrants were 20 year warrants so good until 2028. Although nothing would stop treasury/fhfa from extending them if they felt like it so no guarantee this will be settled in 2028.