Fannie Mae (FNMA)

[FreeFNMA]

I own 75% common and 25% preferred. My rationale is that the "worst case scenario (besides total chaos where commons are worthless) is that commons are worth $1.85 and that preferred is 50% redemption value. For sake of argument lets assume 100k investment. 75k into commons 27000 shares (assuming everything purchased today) and 25k into FMCCL or 2250 shares.

After worst case scenario we are looking at preferred shares to be valued at $56000 and commons to be at $49000 and you basically break even. We know commons with the warrants will be worth something and preferred will have a redemption value at some capacity. This IMO is worst case scenario based on the worst crooked corker plans I have seen.

Playing this opposite and being 75% preferred and 25% commons does lead to more money. 175k in preferred and 16k common = 191k. +91k vs my strategy , this is a pretty sure bet IMO but you do end up with less potential

I personally think they will at a minimum try and get the most out of the warrants while trying to keep the stock price as high as possible. Mnuchin knows that selling 1b worth of warrants or 4b makes no difference to the treasury. 4b at 20 PPS or 1b at 80 PPS makes no difference to him. So he will likely cancel off 80% of the warrants and sell just the 1b and dilute the shares only 100% vs the 500% dilution alot of people assume. This scenario doing the 75% commons yields you alot more money with only slightly more risk.

by the numbers you would be at full redemption stock price 112k + 2.16m vs 340k preferred + 727k in common. 1m vs 2.3m with this scenario.