Fannie Mae-No Politics (FNMA)

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Fannie Mae Fall Offers Buying Opportunity – Bove


Fannie Mae Fall Offers Buying Opportunity – Bove
by ManiMay 18, 2014, 7:54 pm

Fannie Mae’s recent fall in share prices could be overdone. Remarks by Mel Watt, Janet Yellen, and a look at the Senate Banking Committee all point to serious obstacles for supporters of the Crapo-Johnson bill

http://www.valuewalk.com/2014/05/fannie-maes-recent-fall-offers-buying-opportunity-richard-bove/

After the Crapo-Johnson bill passed in the Senate Committee by a 13 to 9 vote, investors reacted negatively, sending shares of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) down, as common shareholders feared their holdings would be worthless. However, many believe that the bill will never be signed into legislation. Richard Bove notes Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) will be heavily relied upon to restart the slowing housing, and it is unlikely that legislators will cut the GSEs.

Rafferty Capital Markets LLC’s Vice President Richard X. Bove in a recent report dated May 16, 2014 titled “Fannie Mae – Classic Buying Opportunity” provides several pointers to support his ‘buy’ thesis for Fannie Mae.

Factors aiding Fannie Mae

Bove points out that the Johnson-Crapo Bill got a favorable reading as the Senators likely cast their positive votes well aware that the bill would probably not picked up in the Senate until next year. The reason that 13 senators voted for the bill is likely because they didn’t want retiring Senator Johnson (D., SD) embarrassed in his last meaningful effort in the Senate, argues Bove.

Bove notes three Senators - Senator Shelby (R., AL), Senator Schumer (D., NY) or Senator Brown (D., OH) are likely to head the Senate Banking Committee next year, and all three voted against the bill. Apart from these three Senators, Senator Warren (D., MA) also voted against the bill. While Warren is not in the running for the banking committee chair, she is a serious candidate for the 2016 Presidential elections.