Fannie Mae-No Politics (FNMA)

[imtheshadow]

Below is a simple (and possibly incorrect) look at how recap dilution would impact (lower) Ackman's projected $23/share figure. I used his $15B earnings and 14X earning multiplier and assumed $100B recap needed (low?) raised a price ranging from $4 - $15 per share. Post dilution/recap price ranges from $5.74 to $11.50 (far right column) - though I wouldn't think they could raise funds above $8/share as the resulting PPS would be lower than that. Happy to revise if folks can point out any errors. Tx


$15,000,000,000 Estimated Annual Earnings
14 P/E Multiple

2,320,000,000 Existing Common
9,280,000,000 Govt Warrants
11,600,000,000 Total Post-Exercise

$100,000,000,000 Recap Needed

Recap
$/Share New Shares Total Shares EPS PPS
4 25,000,000,000 36,600,000,000 $0.41 $5.74
5 20,000,000,000 31,600,000,000 $0.47 $6.65
6 16,666,666,667 28,266,666,667 $0.53 $7.43
7 14,285,714,286 25,885,714,286 $0.58 $8.11
8 12,500,000,000 24,100,000,000 $0.62 $8.71

9 11,111,111,111 22,711,111,111 $0.66 $9.25
10 10,000,000,000 21,600,000,000 $0.69 $9.72
11 9,090,909,091 20,690,909,091 $0.72 $10.15
12 8,333,333,333 19,933,333,333 $0.75 $10.54
13 7,692,307,692 19,292,307,692 $0.78 $10.89
14 7,142,857,143 18,742,857,143 $0.80 $11.20
15 6,666,666,667 18,266,666,667 $0.82 $11.50