Fannie Mae-No Politics (FNMA)

[investor G]

capitalism, you haven't addressed 2 major flaws in your analysis.

and thus the altruism you think you are performing is incomplete.

a) in your analysis of the common share price, and the $60bn of capital needed to be raised, you assume a static share price for the issuance of the shares --- if the 60bn is raised at higher or lower stock prices than current, it shifts the relative ownership percentages relative to now, which has a dramatic impact on the valuation of the currently floated shares. if they go the reform, recap, and release route then there will likely be a period of time where the shares rise before the equity is issued --- especially if they are trying to maximize warrant values.

b) unless the preferred is called or tendered, which is possible, you must admit your analysis of only and exactly 20bn of equity value remaining in a liquidation of cash flows over many years is merely a guess with wild variance around that guess. again, outside of a call or tender, the odds of the wind-down equity value hitting someone's precise guess to give jr preferreds 100pct and common 0 is possible but very low.