Fannie Mae-No Politics (FNMA)

[JosephS]

Eh. Don't worry about the preferred stock. It will be just fine. In all non rship scenarios, it is likely more valuable than the current price.

The common shares have more upside and more downside scenarios. I always think of the worst thing that can happen as my base case.

Those include: 1. High capital ratios forced by their regulatory agency. 2. Warrant exercise and/or sale. 3. Competition being introduced by not allowing refi activity, 2nd home and vacation home activities. 4. Need for massive amounts of capital in a falling market where dilution is higher due to investors demanding more return for invested capital.

Those are a few things that come to mind

On the positive side:

1. Any scale out of a certain activity or business they are in is likely to be structured over 10 to 20 years, not immediate. 2. They need investment capital and to attract buyers the terms need to be excellent so the likelihood of a solid, consistent message is high. 3. A crazy LBO could happen using massive amounts of debt like the RJR takeover in my early investing days. I actually think that this is possible if the structure and consistency of the plan is solid.

Not. A. Recco.