Fannie Mae Preferred S (FNMAS)

[rosen62]

Last year at this time we were told that the reason pfd was holding up so much better than the common was the pfd had some value in liquidation.

If I understood Lamberth's ruling correctly, he said liquidation preference is triggered by receivership or liquidation of assets. So that perceived value has not changed. It *is* there. The market is not paying attention... Now any future bill that contemplates liquidation, wind down or receivership must contain a provision for the Jr. preferred shares or any future law will contradict his ruling. These are his words:

Given that the plaintiffs maintain no current right to a liquidation preference while the GSEs are in conservatorship, the plaintiffs are no worse off today than they were before the Third Amendment. Therefore, there is no hardship imposed on the plaintiffs by withholding court consideration until this contingent right matures at the moment of liquidation. The right to this elevated preference for asset distribution, given to preferred shareholders under GSE stock certificates, is only triggered during liquidation.

Note that he says "the court withholds consideration until..." It hasn't happened yet, but it could. Then, the shares must receive distribution.