Fannie Mae-No Politics (FNMA)

[kthomp19]

Your $ 8 estimate is the most reasonable and is consistent with some of the valuations that Nomura and AGC has suggested. As you mentioned in the past AGC has an estimate of $ 6- $14.

My estimate is not $8, it's $0.69-8.07 with a weighted average of $4.65; the math is in this post. This is right around Nomura's number, and a bit lower than ACG's low end.

Once Calabria's capital rule is released I will go through the scenarios again. Right now I would need to adjust things downward if anything; FnF's combined earnings have been inflated by around $8B per year since 2012, so a $300B market cap looks unreasonable and even $250B seems optimistic. With $17B in combined earnings you'd need a 12 P/E to reach $200B and 15 P/E to reach $250B.

These type of baseline valuations would indicate why first mover institutions like The Growth Fund of American and Fidelity Asset Management added common shares in Q1 2020.

Your JPS holdings will do well also but it is clear that major insitutions own both common and JPS and have added to common in Q1 2020. If they did not have confidence in common valuations they would not have added or they would have reduced.

The Growth Fund of America has been around 70% prefs (as a percentage of all FnF equity holdings) for a while now. So while they did add commons in Q1 2020, they also added enough prefs to keep the 70/30 allocation. The easiest way to verify this is go to their quarterly holdings page and sort by equity name: all their FnF holdings are conveniently consecutive.

Do you have info on how many common and preferred shares Fidelity Asset Management owns? I do remember seeing that they had bought shares (I believe in Q4 2019) but I'm not seeing evidence of it at the moment.

Websites showing institutional ownership are notoriously unreliable. This NASDAQ site only shows 0.18% institutional ownership of FNMA, but the Growth Fund of America owns around 11% of the shares by itself. The CNN site shows this but the FMCC version doesn't list Pershing Square, implying that Ackman owns no shares of FMCC at all.

The Growth Fund of America's holdings are verifiable because they are self-published, as opposed to being aggregated by a third party (which adds the possibility of mistakes).