Yes. That is 100% correct under normal circumstances.
To be fair... here we have the added and highly unusual complication of SENIOR PREFERRED SHARES being given to government under a law that appears to grant a free pass to government for almost anything. So an answer to your question really depends on whether any court has the gonads to rule that such largesse is excess or legal.
That being said as a cautionary warning, check back in time for an excellent analysis by brandemarcus awhile back where he estimated the liquidation value of the Twins. By recollection, his proforma was that after senior preferred liquidation preference was "settled", around $60 B would remain for junior preferred shareholders. In a pure liquidation, this would put settlement at a near-par level... $25 in the case of the FNMAS I own.
Maybe he stays tuned in and would care to comment from the accountant's perspective that I miss, now, amidst the lawyer-wannabe content? Brandy, you still out there?
My personal investment thesis pegs recovery in liquidation at somewhere above $16 per $25 par share value. Recovery in 2019. If release & recap should magically appear, great. Then the 8.25% coupon after full recovery will drive S/P well above $25, with divvies recommenced at no less than 50% payout, pretty much from the get go of release. I'll put that in perspective. Buy a preferred share for around $3. Start restored divvies with a half off discount on an 8.25% coupon = $2.06 X .5 = $1.03. That's a 30%+ return on a $3/share investment.
The vigorish is why so many hitters took positions in preferreds.
Me too.
This is a yield driven market in a macro sense. Coming here from the mReit sector, this looks like a hedged-risk bet on an above average return for people patient for a two year payback. And if the courts come through with a coup, the reward will only come sooner.
JMHO
