Fannie Mae (FNMA)

[HappyAlways]

I started changing from all Commons to 50% JPS 2 years ago, along with suggestion from Glen.

JPS conversion is highly likely, if they want to meet the capital requirement asap. Total JPS is $32B (if I remember correctly) at face value. If they are converted, Commons will be diluted. The dilution will depend on the price of Commons at the time of conversion. Usually, they will take the average price of the past 10 trading days.

There is no use disclaiming JPS conversion. If there is no JPS conversion, they will need to have more SPOs to build the capital. For SPO, the price will be decided usually by similar rationale. So, they will result in similar dilution.

Ever since I hold both JPS and Commons, I am not too concerned about JPS conversion. Instead, I would like a major price hike for Commons before any conversion or SPO. So, it is better to uplist the GSEs to decide the market price.

If there are SPOs, I would request that FHFA to offer priority to existing shareholders just in case the offered price is too low.