Fannie Mae-No Politics (FNMA)

[FOFreddie]

Good Idea! At $ 2.70 - UST FNMA stake worth approx $ 12.42bn (5.75bn X .8 X SP) and $ 2.6 FMCC stake worth approx $ 6.76 bn (3.25bnX.8XSP).

Every $.01 increase in FNMA is worth $ 46 million increase in intrinsic value for UST.

Every $.01 increase in FMCC is worth $ 26 million increase in intrinsic value for UST

Do these type of calculations make sense?

Assume $5 value UST FNMA Intrinsic Value is worth $ 23 bn. UST FMCC Intrinsic Value is worth $ 13 bn. Warrants worth slightly more under this interest rate environment because option value will increase by savings in cost of carry. At $ 5 - UST would have to give approx 83% of warrants to compensate for $ 30 bn overpayments.

If JPS are entitled $ 18 bn in upaid divs since NWS - they would get 1/2 of UST position or 40 % of the float. Common would get 1/3 of the UST position or approx 24 pct of the shares outstanding . Pro-forma UST approx 7% stake, JPS 40% and common 53%. FNMA Common would own 1 full share and approx 1.52 warrants. At $ 5 this would be worth $12.6 in value after settlement.