Fannie Mae-No Politics (FNMA)

[capitalismforever]

In continuation.

In 2015, Fannie Mae produced $11b in net income. Fannie Mae has been very persistent, until the conservatorship, of trading at 10x earnings for a decade. On a non-diluted basis, net income per share was $9.48 per share. At the historical average 10x earnings, that values the entire company at $94.8b. $20b of that valuation is attributed to pfd's, leaving $74.8b to the commons. If a 4% recap occurs (lower than what's been proposed), that translates to a $8 - $10 share price for the commons.

That's based on today's earnings and what the market has historically priced the earnings value. It all depends on how they recap the company and whether warrants will be wiped. Currently, the recap requirement is $25b. Per several dialogues among government, past CFO, proposed legislation, Steven Mnuchin, and numerous articles from reputable people, that will increase significantly. My guess is at least 3% of risk-weighted assets.