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It has to have the content for the pps to show strength . The marketing/publicity may take the pps up but couldn't hold it there and comes back to it's old pps. Just IMO .
The other companies in the sector have low share volume and good infrastructure . In addition to that they have earnings and revenue from vegetables and edible gardens even before getting the MJ licences.
What are the outstanding shares & what infrastructure does it have at current.
3.80 close ?
Darrell, Just curious, if you following about a year now, then how did you miss the opportunity of buying at the bottom around a $1, after the run to $5.44 in May. Did you miss that opportunity ?
With 250 million share volume ? And if the pps is $2, what's the market cap ? You said in your earlier post it will be uplisted to NYSE if the pps is $2. ?? Wonder what are the requirements for NYSE up listing ? pps $2 ??
With $500 million market cap ? With out 2.2 million revenues in the two quarters of last three ?
Fannie Mae: Gold Mine Or Death Trap?
Mar. 13, 2014 11:51 AM ET | 3 comments | About: FNMA, Includes: FMCC by: Gregory M. Wetherall
Disclosure: I am long FNMA. Since November of last year, I have held a modest long equity position in it. I used the recent drop in the stock's price to buy more. I intend to continue adding to my position until it reaches around 3% of the total value of my portfolio.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
Summary
Recent volatility offers a good entry point for a long position in Fannie Mae.
Common shareholders of Fannie Mae and Freddie Mac have legitimate claims against the government for confiscated profits.
The winding down of Fannie Mae and Freddie Mac would constitute a taking of property, requiring the government to compensate shareholders as required by the Fifth Amendment to the Constitution.
Over the past few years, the federal government has created a great deal of controversy as the majority shareholder and conservator of Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC). These two government-sponsored enterprises (GSEs), which became insolvent and were left for dead during the Panic of 2008, have been doing better recently. Better to the tune of more $100billion in profits over the last two years.
While it is reasonable to attribute the post-crisis success of Fannie and Freddie less to fundamental changes in their business models and more to the purchase of trillions of dollars of mortgage back securities by the Federal Reserve, success is still success. And, any rational person would expect the federal government, and its incumbent administration, to bask in the reflected glory attributing their success to TARP and the 2009 stimulus bill. But that 's not what's happening.
Instead of heralding the success of the GSEs, the administration has, in no uncertain terms, vowed to dissolve them in favor of some new regulatory scheme. To that end, the government has done everything possible to undermine the interests of common shareholders and discourage investment in the two companies. In its most controversial move to date, the Federal Housing Finance Agency (FHFA), the bureaucracy charged with overseeing Fannie and Freddie, decided in 2012 to confiscate all of the GSEs' new found earnings and forward the largess to the United States Treasury Department.
Of course, that didn't go over well with common stockholders and it spawned a large body of litigation. The potential rewards of that litigation, together with the return to profitability of the GSEs, resulted in a spike in their stock prices over the past twelve months. Unfortunately, just when these weary equity warriors began to see a flickering light at the end of the tunnel, another of the dysfunctional branches of our federal government joined the fray and blew out the candle.
Although both houses of Congress have, for some time, been actively discussing plans to shut down the GSEs, panic selling of Fannie and Freddie shares reached a fevered pitch earlier this week when Senators Bob Corker and Mark Warner announced plans to introduce a bill in the Senate which would require winding down the two companies. Since then, both stocks are down almost 50% from their recent highs.
While these events haven't really changed anything from a fundamental standpoint, they were very effective at polarizing investors into two camps with diametrically opposed valuations of Fannie and Freddie. One side sees ten-fold returns in the GSEs while the other views the companies as worthless. Certainly, there is a great deal of risk associated with the two companies and extreme price volatility will continue. Yet, for more aggressive investors I think the potential reward justifies the risk.
From a political perspective, I agree the GSEs should be shut down. There is no doubt that the GSEs, together with the other fiscal, monetary and political policies of the federal government, caused the Panic of 2008 as well as the resulting Great Recession. Nevertheless, the government is, in my opinion, without the ability to shut the GSEs down from both a political and a legal perspective. At least not without compensating equity owners.
From a political perspective, the federal government is currently so dysfunctional there is no conceivable way Congress and the administration could reach an agreement to reform one of the largest and most important parts of the economy. It simply isn't possible in the current political environment and probably wouldn't be possible even if one party controlled both houses of congress and the white house. These companies are so large and so deeply ingrained in our economy, it could easily take two decades or more to wind them down without causing a major economic calamity. Moreover, even if a political agreement to deal with the GSE problem could be reached, it is highly unlikely that Fannie and Freddie would cease to exist. In such a situation, it is more than likely the GSEs would survive in some form as a private company with much greater bureaucratic oversight similar to other aspects of the financial industry. Again, these companies are simply too large to be closed down.
From a legal perspective, there is even greater protection for common stockholders. At the height of the 2008 Financial Panic, when Fannie Mae and Freddie Mac became insolvent, the federal government clamored for ways to rescue them. With more than $5 Trillion in guaranteed mortgages on their books, Fannie and Freddie were the ultimate examples of "Too Big To Fail." Their demise would have directly or indirectly affected almost every financial institution in the world and could have triggered a domino effect leading to the failure of virtually the entire global financial system.
The government's response took shape with the enactment of the Housing and Economic Recovery Act of 2008 (the "Recovery Act") which created the Federal Housing Finance Agency (FHFA) to oversee the GSEs and vested new, wide-ranging regulatory powers in the new agency. Prior to the passage of the Recovery Act, the government could force the GSEs into conservatorship if they failed to meet certain capital requirements. The government did not, however, possess the legislative authority to liquidate GSEs in receivership. The Recovery Act changed that and authorized FHFA to appoint itself as a conservator or a receiver for the GSEs if certain conditions were met. See 12 U.S.C. § 4617.
On September 7, 2008, the FHFA exercised its authority under the Recovery Act and placed Fannie and Freddie in conservatorship. Immediately thereafter, the FHFA dismissed the officers and directors of both Fannie and Freddie. Furthermore, the FHFA signed agreements on behalf of the GSEs whereby, in exchanged for capital infusions, each GSE issued $100 billion of senior preferred stock with a 10% coupon to the Treasury together with warrants permitting the government to purchase 80% of the outstanding common stock of each company with an exercise price of less than a penny per share.
In the current debate, most people assume that the government has the absolute authority to do as it wishes with the GSEs and few people question the authority of the FHFA to enter the agreement it made with the Treasury Department in 2008. The FHFA is, however, clearly limited in its authority. Specifically, the Recovery Act, which created the FHFA and authorized the appointment of itself as conservator, also sets forth the powers which it may exercise as conservator. The Recovery Act states, in relevant part, as follows:
The Agency may, as conservator, take such action as may be-
(I) necessary to put the regulated entity in a sound and solvent condition; and
(ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.
See 12 U.S.C. § 4617(b)(2)(D). At its essence, the statute requires that the actions of the conservator be necessary to keep the GSE solvent, carry on its business and conserve its assets. Any actions taken by the FHFA which do not meet these requirements exceed the scope of its powers.
While one might argue as to whether the FHFA negotiated the best deal possible when it entered the 2008 agreement with the Treasury Department, it would be hard for any reasonable person to deny the agreement was necessary to keep the GSEs solvent, carry on their business and conserve their assets. On the other hand, the 2012 agreement, whereby the FHFA agreed to transfer all GSE profits to the Treasury as dividends on its preferred shares, clearly meets none of the statutory requirements. In fact, the latter decision flies in the face of the statute as the payment of unnecessary dividends undermines the solvency of the GSEs, interferes with their ability to carry on their business and, rather than preserving their assets, gives the assets away.
These actions, by the FHFA, clearly give rise to causes of actions on the part of the common stockholders of Fannie and Freddie to recover the dividends paid to the government in excess of the 10% to which the government was entitled. And the amount of the overpayment is substantial. Under the terms of the original agreement, the government was entitled to approximately $40 billion in dividends from the GSEs since 2008. As a result of the 2012 agreement, however, the government has been paid more than $100 billion and that figure continues to rise. Based on these numbers, the government has, to date, been overpaid to the tune of about $60 billion which is approximately 12 times the entire market cap of Fannie Mae.
Fannie and Freddie also clearly have value as going concerns. For example, at the end of its last reporting period, Fannie Mae showed $10 billion in book value, had $30 billion in operating income and generated free cash flow of $81 billion. While the government could try to shut down the GSEs, such action would clearly constitute a taking of property from the common stockholders for which the government would be required to provide just compensation in accordance with the Takings Clause of the Fifth Amendment to the United States Constitution.
Now pps is 3.90
Hit 3.79 now .
These bills won't pass this year, or next year or in 2016
That would be great .
Wonderful.
FMCC high of the day 4.74
FNMA high of the day 3.79
Thanks for your time Obi.
I am seeing 4.55. now ?
Still here
Crawford, You , Detearing & Obiteridctum, as you people are there on the board, I feel longs are good with their investment in FNMA.
. I like the post .
win- win for all .
The share holders may get paid based on the actual value if the share. Not based on the current share price in the market. Incase of FNMA the actual value of the share is $40(with warrants ) ?? Or $120( with out warrants ) ?? . This is just IMO .
Congrats to all longs. This is not a penny stock any more . I believe we could see $10 in the next 3 to 5 years. .
Lagavulin whiskey.
http://www.scotchwhisky.net/malt/lagavulan.htm
DT I am with you & I am glad you are here guiding us. Thanks for your information .
For Fannie Mae president ?
Looks like Jaren knows the true value of the stock much before when no one not even think of that price even in their dreams. Just like as he saw the true potential when it was about 0.30 ?? when no one even think of it ?? . That makes all the difference . Just IMO .
Haha.. is it the case with all the companies which have taken the help with TARP funding during the same time of 2008 & 2009. Why they haven't taken at least 1 to 1 profit with AIG, GM, Citi Bank and others . Why Fannie Mae and Freddie Mac are differently treated. Govt got about $22 billion profit ?? on funding of $180 billion ?? help to AIG. How much profit it got incase of $33 billion ?? of GM help ??
Berkowitz dismisses rationale for GSE "profit sweep"
http://seekingalpha.com/news/1617403-berkowitz-dismisses-rationale-for-gse-profit-sweep
Berkowitz dismisses rationale for GSE "profit sweep" • 12:45 PM
"Total nonsense," says Bruce Berkowitz of Treasury's claim that 2012's altering of the Fannie (FNMA +4.1%) and Freddie (FMCC +3.3%) bailout - in which regular dividends were scrapped in favor of the "profit sweep" - was necessary because at the time it was worried the two couldn't earn enough to make the payments (a forecast the improving housing market has made wrong).
Berkowitz's reading of the original bailout says the GSEs could have issued more stock to Treasury in lieu of cash, and he's' scratching his head as to how both the government and the GSEs failed to know this. Conspiracy? “I prefer the simpler reason that no one bothered to read the agreement.”
Another reason is government lawyers' reading of the documents differs with Berkowitz. Ultimately, a judge will probably decide.
Separately, how going long Fannie and Freddie became the latest version of The Greatest Trade Ever.
Read comments
FNMA price at time of publication: $5.55. Check FNMA price now »
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Focus Articles on FNMA
Fannie Mae Hitting $10 Soon? by Achilles Research
Why Does Ackman Think Fannie Mae Is A Ten Bagger? by David Sims
Fannie Mae And Freddie Mac Common Shares Are Overvalued by Tom Dorsey
More News on FNMA
Fannie Mae wastes little time rebuffing Berkowitz Mar 4, 12:15 PM ET (Seeking Alpha)
Fewer affordable houses, even as credit eases Feb 11, 1:29 PM ET (CNBC)
Berkowitz's no-hedge hedge fund up 33% Jan 16, 1:37 PM ET (CNBC)
Press Releases on FNMA
Housing Recovery Expected to Press On Despite Recent Volatility in Consumer Attitudes (PR Newswire)
Fannie Mae Releases January 2014 Monthly Summary (PR Newswire)
2014 Economic Growth Off to a Chilly Start (PR Newswire)
Related Articles on FNMA
Fannie's New Chairman Perry Touts 'Essential Role' Of GSE by Todd Sullivan
Fed Officials And GSE Shareholders Surprised By 2008 Crisis by David Sims
Tracking Bill Ackman's Pershing Square Portfolio - Q4 2013 Update by John Vincent
StockTalk on FNMA: FNMA StockTalk | Twitter FNMA | Twitter $FNMA | FNMA Instablogs
Recent Market Alerts on FNMA: All news | Earnings | Dividends | M&A | On the move
Transcripts on FNMA
Fannie Mae, Q1 2008 Earnings Call Transcript by SA Transcripts
Fannie Mae Q4 2006 Earnings Call Transcript by SA Transcripts
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We may not get surprised listening from some of the longs when they say this is a $5 stock when it trades at $2. Just IMO .
Few months back it's just a 0.07 cents stock. When some of the longs at that time used to say that this is a $1 stock!! Now it's almost there. But now they telling it it's a $2 stock!! Have to see how long it takes for this to be there... This is Just IMO .
That means can I take that as the pps will be well over $4 by the time of up listing in Nasdaq ??
I think $100 easy. Just IMO .
Comment by gentlesword in Seeking Alpha article:
You forgot something big:
If Fannie Mae is back in the hands of private investors, it will be deemed too big to fail. 3.3 trillion asset is more than 150% of the JPM or BAC. The equity portion on its balance sheet is only $9 billion, 0.3% of the total asset or a leverage of 330, which is 10 times of the equivalent to those of all big banks back in pre-subprime crisis. That is the principal reason why the EPS is so high.
Assuming the dream comes true, it still either has to raise private equity to the level similar to the big 4 banks according to the current legal environment, or has to spin off only super minority (say less than 10%) of the asset to the hands of private investors plus still needing to raise some equity, leaving the super majority of the asset for the government to wind down. Either way, the real EPS will be hugely diluted.
Do not get me wrong. I am holding both common and preferred shares and intend to bet all the way down to see the final hands. But I am just feeling any price valuation of more than $20 for the common share is a wishful thinking.
Fannie Mae Hitting $10 Soon?
Mar. 9, 2014 4:38 AM ET | 1 comment | About: FNMA
Disclosure: I am long FNMA, RDN. (More...)
Summary
Fannie Mae is still a great contrarian bet at $5.50.
Potential long-term intrinsic value of $45 per share.
Short-term upside potential to $10 per share.
Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) appear to be great turnaround investments. On October 3, 2013 I have written an article about Fannie Mae titled 'Fannie Mae Common Stock: A Once In A Lifetime Asymmetric Bet on Washington's dysfunction'. I particularly argued that contrarian investors should take a close look at the common stock of Fannie Mae -- not the preferred stock. Bill Ackman subsequently bought Fannie Mae's common stock and, just recently, noted bank analyst Dick Bove of Rafferty Capital Markets argued that Fannie Mae could indeed fetch a price of $18 per share.
While I was right in recommending the common stock back in October, I misjudged how quickly investor sentiment can change and I clearly expected much slower price appreciation. My thesis was largely based on the idea that the Treasury and the Federal Housing Finance Agency (FHFA) acted in an unconstitutional manner by placing the GSEs into conservatorship and by sweeping their profits. As such, I expected an instantaneous increase in the value of Fannie Mae's common stock. The net sweep is now challenged in court and a net sweep court ruling will still be a major catalyst for Fannie Mae's share price. On October 3, 2013 I wrote:
The common stock offers an asymmetric bet on a status-quo secondary mortgage market structure. In terms of risk/reward ratio I would put Fannie Mae into the same basket as American International Group, MGIC (MTG) and Radian (RDN): All of them were pronounced dead but they just defied the odds and made staggering comebacks. Investors purchasing the common stock bet that the sweep agreement will be repealed and both preferred and common stocks gain in instant value. Until the courts have made their decisions with respect to the preferred stock, the common stock is likely to fluctuate erratically. As long as the sweep agreement is in place, I would not recommend speculating on specific earnings announcements. So far, the market has accepted that earnings will be swept over and aren't value accretive to either the preferred or the common. The court's ruling on the preferreds and political inaction are the determining catalysts for Fannie Mae's common stock.
I also still believe that the US mortgage industry will not be fundamentally reformed since Washington is utterly incapable of reaching break-through compromises. The US mortgage market represents a good chunk of the US economy and a major restructuring is unlikely. Fannie Mae and Freddie Mac are here to stay.
Since shareholders have no clarity yet about the legality of the government seizure, uncertainty with respect to the true value of Fannie Mae's common stock is quite high. Uncertainty, however, is always a great indicator of contrarian value since investors get paid for taking risk and not by waiting around until results are delivered (that is, a court ruling).
Long-term value
I think Fannie Mae common shares are still a good BUY even though shares have risen strongly above the $5 mark. SA author David Sims derived an adjusted EPS of $3.94 for Fannie Mae in 2013, which I think can increase substantially over the next years as the recovery in the housing market gains traction. I believe Fannie Mae can achieve $4.50 in recurring EPS (available to common) in 2015/2016. I also think that Fannie Mae, like any other profitable, industry-leading enterprise, could trade at 10x forward earnings which would give the stock a fair value of $45 - if the company is returned to shareholders.
Technical picture
Fannie Mae's share price is up 268% since I aggressively made a case for the common stock back in October 2013 - an outstanding return for a five month holding period. Fannie Mae's common stock has consistently edged higher since the end of February driven by high volume and bullish sentiment.
(Source: StockCharts.com)
Conclusion
My fundamental thesis hasn't changed at all: The structure of the US mortgage market isn't going to change - thanks to Congress. Simultaneously, investors face explosive upside potential should the company indeed be returned to shareholders. The risk/reward ratio remains extremely attractive.
While the Relative Strength Index indicates that shares of Fannie Mae are overbought in the short term, momentum is clearly on the side of bullish investors and I wouldn't be surprised if Fannie Mae's share price touches the $10 mark in the near future. Long-term investors, however, are looking at substantially higher share prices - $45 region - should the company be returned to shareholders.
Fannie Mae is still a great contrarian bet at $5.50 - Seeking Alpha
Potential long-term intrinsic value of $45 per share. - Seeking Alpha
Fannie Mae hitting $10 soon ? - Seeking Alpha.
http://seekingalpha.com/article/2076353-fannie-mae-hitting-10-soon?source=google_news
Ok got it. Thanks.
Why need to give so many interviews ?? Isn't there much work in the company ?? Isn't financials, revenues , returns , profits speak all about the company ?? Just IMO .