Fannie Mae-No Politics (FNMA)

[jeddiemack]

Expectation and forward looking valuations.

If what we've just learned is true and the new mel watt now is going to collect a pay check for 4 years without doing diddly do and somehow if possibly true allow the gse's to retain capital until released in 5 years, then shouldn't the preferred trade at some discount to par that is effectively a yield to maturity? At a discount rate of 6% that might make them worth around $18 on a $25 coupon.

Similarly the common, should also trade at a discount to their 5 years from now multiple. With the only uncertainty the dilution of the greedy government taking more thru the warrants (which i believe would be a taking) You don't have to take all of my asset for me to lose some portion of value. Taking 80% is more than 1/2... So, as a 5 year discount to fair value shouldn't this put common stock at significantly higher ?

I mean, if the market is supposed to trade off of future earnings, wouldn't 5 years from now future earnings with today's capital structure not indicate a much higher valuation, even if diluted 5x (which again would be near criminal and bring upon more lawsuits?)