Fannie Mae-No Politics (FNMA)

[kthomp19]

The conversion will be timed in such a way as the minimize (to the extent possible) the dilution of commons, per fiduciary responsibilities.

I think you are completely wrong here.

1) The conversion will happen either before or alongside release, which means fiduciary duties won't matter at all because at that point those duties will not have been restored.
2) Your quote from the Delaware Chancery Court does not prove your point either because FnF's junior-to-common conversion won't be at the expense of the commons; instead it will be a pre-requisite to a capital raise that helps all shareholders relative to it not happening. It also doesn't apply to Freddie which is chartered in Virginia.
3) FHFA, as said by three different judges (with no judge saying the opposite), has no fiduciary duty to FnF shareholders ever, even outside of conservatorship. If FHFA as regulator directs FnF to offer a junior conversion, even at a ratio you find unpalatable, fiduciary duties won't matter; FnF will have no choice as to comply (see 12 USC 4616(b)(3) for example). The same is true if FHFA declines to approve a capital restoration plan that does not include a generous conversion.
4) FnF need lots of capital, and prospective investors have every reason to insist that the juniors be converted first so that the new shares have more economic value. It will take a generous ratio to get the juniors to agree, and there will be no reason to protect the common shareholders because raising capital is a far higher priority.
5) Citi's conversion offer was at a ratio 3x greater than the market ratio the day before, and this happened under a BOD that did have a fiduciary duty to shareholders.

The fanciful idea here is that anybody will care about current common shareholders at all. They have no rights, no vote, and no duties owed to them, and won't gain any of those until after they are heavily diluted by the warrants, a capital raise, and a junior-to-common conversion.

If Treasury wants to maximize its return it will monetize the seniors, not try to maximize the per-share price of the commons.