Fannie Mae-No Politics (FNMA)

[NobodyFromNowhere]

My Final Valuation and Goodbye to Message Board W's

I give you my quick and dirty valuation.

I'm going to discount the crud out of everything and give you a current valuation of $9 to $18 per common share. I'm discounting everything so much that even if I make a mistake somewhere, I know that I'll be fine.

Assumptions:
Economic - no change in g-fees, no growth business, no international expansion
Normalized Earnings - ends net worth sweep, eliminates 1-time charges, and tax rate of 34%, no settlements, no credit gains/losses

2014 4th quarter pre-tax income
FNM: $4.8B
FMC: $3.6B
Total Annualized After-Tax (Multiply x 4) * (1 - 34% tax rate)
$22.6 Billion
Less Jr. Pref Dividend of $2 Billion
Net Income Available to Common Shareholders: $20.6 Billion

FNM Shares Outstanding: 5.762 Billion
FMC Shares Outstanding: 3.236 Billion
Yes, this includes the Warrants! This multiplies current shares outstanding x 5
Total Shares Outstanding: 9 Billion

Annualized EPS Per Common Share: $2.29

I am now going to give you the valuation in 5 years for the following PE multiples. I push this out 5 years because I am assuming that it takes 5 years for the companies to build enough capital through retained earnings so that they can pay both a preferred and a common dividend. I then discount the valuation in 5 years by an annualized 20% interest rate to give you today's valuation.
Today's!
Discounted at 20% Upside from
PE Price in 5 years Compounded Rate Current Price
10 22.90 9.20 337%
15 34.35 13.80 506%
20 45.80 18.41 674%


So, I hope everyone is happy. Yea, preferred's, in 5 years, you'll get a dividend, and then you will have a full Redemption Value, so please shut the fuggup. Common's, your sh should really be trading between $9 and $18 today, you freaks! The market is not efficient and as Ackman says, this is the best risk reward in the market right now.
The Rest of Most Post is Edited for Vulgarity!