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Reality, it could be gone tomorrow. That's why I preach so earnestly about worrying about the downside (the things you rarely see) more than the upside.
Whether you have $100 or $100,000, the goal should be the same: Preservation.
Not really. A hedge fund has a lot of headaches I'm not sure I have the fortitude to deal with.
I only left my surname. There are many of us in the U.S. Thank you for your kindness.
My Irish father earned $27,000 per year as a journeyman carpenter at the height of his earnings capability. He had an eighth grade education. He didn't want his six children to be like him. We weren't. We never acquired, so far, the wisdom that he tried so desperately to pass on to us. For starters, he never used a computer - and didn't even know what the purpose of one was. And, here we are now. :)
Nice!!! I currently am all in which I never do. Hope I don't regret but can't think of another investment that will pay out as well and trying to set up retirement. After the last run up I only sit at 750K value but that is enough to keep me up at nights LOL Somewhere at the 7-8 range I will pull some out and pay off my commercial building so its a guarantee win for me at that point. GO FNMA
$600k split between Fannie Mae commons and the newer issues of Freddie pfd's (certainly not evenly), not 100% in Fannie Mae commons. That, however, doesn't make me anymore right than the gentleman that has $2,000 invested in either/or. One should be judged on the soundness of his reasoning rather than the gifts God has provided to him. For even a homeless man has worthiness even though his pocketbook does not.
Regardless of my dyslexia, Rick, I hope my $600,000 investment in Fannie Mae common & Freddie Mac preferred's pan out. If they don't, maybe I could borrow a few bucks from you? In the least, maybe you could show me how to compound interest using your wisdom. I'm always willing to learn.
In the meantime, here's mine over the last 26 years. Feel free to poke some holes: (a few weeks out of date, let me know if you require an update)
I have no idea. Wish eBay still sold crystal balls. I'm more interested in knowing at what point in time will doctors find a cure to dyslexia. Unfortunately, I've exhibited it more often here than I intended to. My son, who's a Navy Seabee's is the only reason I found out that I had it for so many years. Until he pointed it out, I just thought I was stupid. With his help, I know I am. Lol.
If you look at the .pdf I submitted, it not only fixes the error but is more optimistic towards the upside.
Should't the PE be the pps/eps not the market cap/eps?
$100 / $6.25 = 16. Is a PE of 16 impossible?
The "release" won't happen over night. It will be a gradual process of relighting f and f. So, using earnings will be a big piece of it.
I'd expect a capital raise, but it will be after the market has welcomed f and f back. Such that the pricing will be attractive and be at a time when dividends can be paid.
I wouldn't expect this to occur in 2017 or 18. Probably mid 2019 would be when this could occur.
Its a process we only need to let it start.
An update per your request.
http://docdro.id/F9UYE16
I can not figure out the pe value. For instance, for the first line item I get a pe of 8.26 that requires a pps of $13.50 and then for a pps of $10 it seems to require a pe of 6.12.
What is the Risk Weight in reference to?
You have done a lot of work, but I think most readers do not understand the tables. I don't either really.
I would like for you to write out an example of one line of your calculation in complete detail. Then I will vote for you. You know that Hillary is now President of California, right.
But I won't read it until tomorrow.
Depending on the price, I might.
Thank you. What some don't know, and it seems I have a lot of enemies which is ok, is that ultimately I'm testing my reasoning because there's always that chance that I could be wrong.
Ultimately, the price will be whatever the company, under direction from the government, determines the share price to be in order to meet the needs of the imposed capital requirement and whatever other dilution may occur, if any.
I'd like to know your opinion: what's your definition of "reasonably fast", considering the majority of investors in the U.S. consist of people that place their bets several times during the day, and usually end that day "cashed out"?
Updated scenerios:
http://docdro.id/yJ6QV5b
I couldn't care less. I've been an investor for 26 years. I realize you feel you lifted your leg and claimed your dominion, but that puffery means absolutely nothing to me. Good luck to you.
I don't don't know if it's great. I can only think based on my ability to do so, and believe me - sometimes that's flawed. Thank you, sir.
They're without warrants being excercised. My reasoning for that is: I believe they'll be dropped in exchange for the lawsuits to be dropped. It's a gut feeling, nothing more. I believe Tim has included the warrants in his belief. Don't recap for sure, though.
I'm both, slick. Stop perceiving my opinion as being anything other than a sharing of my opinion. I've made over 200% (much less than some here) on my investment thus far and have the goal of receiving more. So don't come off as though I'm trying to do anything other than share my opinion, which happens to be an optimistic one.
Just curious as to why they would issue new stock over letting them use annual earnings to recap themselves. It would take a couple years but if the government backed them for those few years as payment for nationalizing them it could be done. I know its a quick one shot deal if they do a secondary offering. But the idea is to get them healthy as possible and (hopefully) stop the incredible theft from the share owners.
Yes, I have to admit that my thesis has changed a bit because of the newly discovered (for me) cyclically adjusted PE Ratio. But this for me, is weighing the upside more than protecting the downside. It's worth the work, in any event.
I will say though, this is highly dependent on whether the market participants will pay $40 - whatever amount for newly issued shares.
You forget that the government owes back a few billion for what its taken > what it shoved at Fannie
Next, you miss on retained earnings.
Why would you immediately sell $60B value when in just 3 years if allowed to recap on its own it could have $30B from RE and another $30B returned from the government.
If all you wanted to do was float 100,000,000,000 shares of stock just to be hurtful your scenarios work, but its not practical or realistic.
Definitely a lot of possible outcomes, which is why it's such a speculative investment, and why I wanted to put this together (which I've added to significantly since posting). Just a guide in hopes to help visualize the various possibilities. I have my personal belief, based on what's been proposed so far before congress and what I've read from Tim Howard (who I believe knows this business better than anyone). Doesn't mean I'm right, just means that if $10 is the downside based on my reasoning, the probability of a positive outcome is higher than if it were say $3.
I should point out that in no case do I find the possibility of $0 remotely logical. After adding to the data for the last couple hours, I realize that my original thesis of a 10 multiple is incorrect. I've now calculated the cyclically adjusted PE over a 14 year period of sustainable earnings to be 14.62, which provides evidence that a $60, $70, and so forth, valuation is possible depending upon the determined capital requirements.
Any math. Your statement is based on news. News doesn't create intrinsic value.
A quick spreadsheet I put together to give an idea of how the recap will affect the valuation based on different scenerios (certainly not all scenerios). The following is assuming no excercise of the warrants and senior preferreds are considered paid in full.
http://docdro.id/3P8xeGk
The data suggests that anything above a $75b recap - the investment becomes less attractive. I believe it all comes down to the capital requirement.
Good luck.
Even if I'm proven wrong, I will still reap the benefit. I don't think this will take another year. I think we'll see something transpire by April.
That possibly might be true. However, I rather remained unpersuaded and be on the lookout for fundamental factors on a daily basis than be caught up in the all too often occurrence of irrational exuberance.
Lol. I doubt I'll make it but I'll definitely buy a round for everyone in my absence.
No it didn't. It traded in the mid 80's in 2001. It had 997 million shares at the time, a lot less debt, and was a completely different economy. 2001 was the height of the tech bubble that pushed everything up for a minute before it crashed.
I know a guy that was a millionaire in the mid 2000's. Today he's broke and I highly doubt he'll ever be a millionaire again. The past doesn't dictate the future.
The value of the business isn't $161b so I guess I don't understand what you're saying.
Facebook has nothing to do with an 80 year old company with highly predictable earnings. This isn't an IPO, young man.
Am I missing any? ;)
new buyers will have higher mortgage rates and fixed mortgages can't be sold with the property like they were in the 80's. that will bring home prices down and fannie credit losses up. expect them to add to credit loss reserves and require more capital. all in, should play out okay for pfds. commons will get nothing. if they do get something, it will be so diluted, it will be like trying to get drunk off of welch's grape juice.
Watt can. I was speaking specifically towards Obama. At this point of the game, it makes no sense for him to even comment on the matter knowing that the Government, under his direction, have withheld evidence from the citizens. For him to comment on the GSE's at this point is in poor taste. He just needs to go away.
Completely agree.
No. Prior to the 2008 crisis, FNMA earned about 7 to 8 dollars a share per year, and paid about 2.00 in dividends, and traded around 60 per share in 2007.
Considering that Fannie earns about 20% more than that now, and considering the real possibility that FNMA shareholders could get back a portion of the money the government illegally took from shareholders, a share price in 5 years of over 60 per year is realistic, after release and relist. Remember, the goal of the conservatorship was to "preserve and conserve" not rape pillage and plunder.
That particular one doesn't suit my objective. I'm more interested in the newer issues.