Fannie Mae-No Politics (FNMA)

[DaJester]

"This sounds like weaseling to me. Show your work.
And in and case you already did give me numbers: $38 per share with warrants and $190 without. I just want to know more details about how you got them. You said that you're constantly making adjustments so I won't hold you to whatever number you happen to quote forever into the future, but as of now I do have something to anchor on."

Yes, I gave you some example numbers based on your 75% likelihood of SPS conversion. $38/190 if you want to use that as my position given YOUR input criteria. There's probably enough info for you to substitute whatever % likelihoods you want and come up with new expected returns. If you can't reverse engineer my methods, that's too bad.

"Smart. Effective portfolio management doesn't depend only on expected value but also variance of returns. Since so much of the common expected value in your model hinges on something you think has a 1% chance of happening (seniors and warrants both cancelled), slight deviations to that 1% would have a huge effect on your distribution of potential returns."

The 1% I also did for your benefit as I figured anything higher you would balk at. A lot of what I do is based on weighted risk averages and scenario planning. Over the past 5 years I have a risk-adjusted alpha of 5.96 with a Beta of 1.04 vs the S&P500. The last few years have been particularly challenging in the market and I'm mitigating the best I can. Just because I don't show my work doesn't mean I'm not putting in the work.

I wish I was like Ace Trader and had retired at 47, but I'm late to the game and have only been doing this the past 10 years.