Fannie Mae-No Politics (FNMA)

[Cubshawk]

My assumption is commons come out of this no worse than $6 - but somewhere between $8-15 is the likely share price we'll see at the point of release from conservatorship. And that's the actual price - not a diluted/reverse split price for current common shareholders.

Given this isn't a liquidation scenario - preferred shares aren't going to get par until the dividend is restored. (unless you consider conversion to common shares a 'par' equivalent) Reinstatement could be years from now.

This is why in the near term I think common is the better play - the announcement of the GSE's retaining earnings should cause exuberant buying - hopefully over-exuberant. And possibly, if it works out, after riding the quick upside of common I can convert some to preferred shares for the safety/long-term dividend possibilities.