Fannie Mae-No Politics (FNMA)

[rekcusdo]

Comparing to AIG is illogical. They are two different companies. While there are similarities in the government actions against them, they aren't comparable. That being said, the warrants didn't dilute the pps of AIG any more than they diluted the pps of FNMA.

As for your other questions, I haven't made any "calculation estimations". In fact, I haven't speculated as to any price at all. I'm not trying to tell you I believe it will be any specific price...as that would be impossible to determine. If anything, I'm taking Ackman's statement as the truth and estimating about 30-40 dollars. So, I suppose that is the answer to your question 1...my numbers are Ackman's numbers. If Ackman says that they are worth 30-40 with the warrants, then that means the warrants haven't been exercised in his valuation. In which case his pps is based on a less than 2 billion outstanding share estimate. I tend to believe that estimate.

If the warrants were executed TODAY, the pps of the stock would fall considerably...I would argue as much as to 1/5 the current pps. If the warrants being executed TODAY can cause the PPS to fall to 1/5 the current pps, it makes no sense to say that they can raise to 5x by invalidating them. Technically, the only thing invalidating them does is undo the possibility of them being executed and making the PPS fall to 1/5 the current pps. That is why they will not make such a big effect. Perhaps a few dollars just due to the reduction in uncertainties.

Also, I don't consider our post crisis income as spectacular compared to pre crisis income when you consider the accounting frauds in the pre crisis income. The pps was trading WAY higher than it should have been given the fraudulent accounting being done. If the pps had been corrected in pre crisis to its true value, it probably would have been worth half what it actually was trading at. To add to that injury, the current valuation of the mortgage portfolio for fnma is only at 350 billion dollars. It was estimated at 700 billion in pre crisis. So, I don't consider ourselves in a better financial situation than we were in the fraudulent estimations of pre crisis.