Fannie Mae (FNMA)

[camaro4me]

Nothing is being heard from the inside.

We think en banc will be released prior to July 18th and favor Plaintiffs. This will open additional legal maneuvering for shareholder lawsuits.

We think the Treasury plan will be released internally to FHFA by end of June and then undergo internal negotiations between FHFA, Treasury, and Kudlow. Kudlow will release in late August after Trump reviews. Net Worth Sweep won't happen in October.

The recap and release plan will have a longer horizon than most people want to see (probably up to 3 years but definitely initiated next year).

I'd expect listing to NYSE as early as 3Q2020 and full release in 2021 but wouldn't be shocked if it bled a little into 2022. Republicans and Democrats will negotiate a bipartisan housing reform package that gives additional powers to FHFA (Calabria/Economist Gang), creates some type of ongoing guarantee from Treasury (Swamp Gang), protects the 30 year mortgage (Consumer Protection Gang), and creates an opportunity for additional charters to be issued beyond Fannie and Freddie (Wall Street/Banker Gang).

That being said it is not unreasonable to assume en banc will push this to $5/s, the plan to push it to $7-12/s, and eventually Fannie and Freddie to be trading between $50 and $100 with all dividends restored in the next 3-5 years.

We may see some kind of conversion and dilution but no one is going to end up holding a bag. Everyone is going to walk away with at least 2x upside. And, it just may happen that all this talk of IPO, re-IPO, or secondary offering to raise capital is just garbage and FHFA/Treasury work something out that is much simpler.

We wouldn't be doing this if we believed otherwise and I have some very smart guys on my team.

Everyone has been very patient. It always gets hard right near the end. Stay strong and be patient just a little longer.