Fannie Mae-No Politics (FNMA)

[camacho]

commons V preferred. let's discuss.

it would seem that to a certain extent, the thesis for release and recap is equal for both.

however, one cant forget that the preferred holders such as Berko are looking for a payback from tsy as a major end goal. Preferred holders believe that financial retributions will be inbound from tsy for lost dividends due to net worth sweep.

common holders, such as ackman, have calculated a thesis to where even if the warrants are fully exercised the commons could trade in the 20s after all is said and done. 'All' that needs to occur is an end of the net worth sweep and a recap plan.

so most of you already know all this. but, how can both prefs and commons succeed? as we also know, fairholme is not challenging the warrants. in fact, no case atm is challenging warrants. Afterall, dont prefs sort of want warrants to be exercised in the hope that those funds could provide recap funding as well as perhaps avenues to pay back lost dividends?

well that's not going to happen. there is no way gov pays back prefs a dime with tsy money OR warrant money. no chance. To fully win, pref holders need back divvy money (since prefs have 'limitedd upside') which will only come from an agreed upon recap plan. that is a reach. feel free to time stamp this. those who think one day a court will rule that pref holders are privvy to back dividends are misguided. commons on the other hand simply need to end the NWS and pray that the warrants are somehow crimped or voided all together. Tsy can allow a capital raise to occur at much higher prices which could generate plenty of recap money easily.

feel free to disagree, but while Berk and Ack both want an end to the sweep now, after that would occur, they will no longer be in the same boat. think commons are the way to go long term, and even though Berk and Mnuchin know each other from the shld BOD and lampert was roomies with mncuhin in college (read that somewhere) not so sure mnuchin can pull out a preff victory if that is indeed what he intends to do.

this investment is still very complex. politics has made anything trump wants to get done the soup of the day for the rest of DC feast on. expecting a 'payout' from tsy seems audacious even if it is just under law.