Fannie Mae-No Politics (FNMA)

[GAK-]

Long, slow process for Capital Raise.

It is going to take years to build capital, even CET1 capital. Those who imagine it will be done within a month or two of consent decrees are dilusional

1. The combined TOTAL of IPO's this year (2020) is $95B, last year $84B. That is the total for ALL companies, not just one, and most of them were growth companies, not insurance companies like FnF. It will take FnF years to raise the capital they need.

"This year is shaping up to be one of the busiest years for IPOs on record, as investors leap at opportunities to invest in fast-growing technology upstarts. Issuers had taken in $95 billion from U.S.-listed IPOs through the end of Wednesday, exceeding the $84 billion raised at this point in 2000, the previous record year, according to Dealogic."

https://www.wsj.com/articles/palantir-expected-to-be-valued-at-nearly-22-billion-in-trading-debut-11600990739

2. The largest single US IPO on record is Alibaba at $22B

https://www.statista.com/statistics/226152/largest-ipos-in-the-united-states-by-issue-volume/#:

3. The largest worldwide IPO was Petrobas, most of which was not actually cash. The cash portion was only $36B

"Brazil’s government - which already controls 40 percent of the company and more than 50 percent of its voting stock - will receive $43 billion in shares in exchange for allowing Petrobras to drill for 5 billion barrels in reserves. The other $36 billion will be cash raised from investors"

https://www.france24.com/en/20100924-petrobras-70-billion-dollars-largest-ever-share-offering-brazil-oil

4. AIG went to market 6 times to raise their cash. Converting Pfds did not happen until they went to market first. They went to market in 2010, but did not convert legacy Pfds until 2011.

https://www.courthousenews.com/class-claims-aig-took-it-for-5-billion/

http://www.timelessinvestor.com/2019/01/10/history-of-aigs-recapitalization-and-stock-price/

5. I expect FnF to follow suit. Since it will take them a few years to raise core capital, they will not be in a rush to convert Pfds.