Fannie Mae-No Politics (FNMA)

[big-yank]

Valuation, valuation, valuation. Who's got warrants figured right?

The problem with the warrants is not just dilution of the S/P. It is also their dilution of the common dividend pool. Fannie paid $2/year in common divvies prior to 2008. Dividing that by 4 B additional shares drops the two buck divvy to forty cents. That would tend to drop the common share price from around $60 where it sat, prior to 2008, to around $12 under the dilutive scenario.

Ackman is no dummy. He has a HUGE stake in trying to make the warrants go away in any settlement. It is the preferred stakeholders that care little about warrants. Easy for them. They have no skin in that game.

Commons rise to $60 with warrants rescinded. Or they go to $12 with warrants left intact. That's my best guess.