Fannie Mae-No Politics (FNMA)

[LuLeVan]

No "quagmire": Here's what Tim Paglaria thinks about common and preferred performance.

Ron,

I am filing my 13F today which will show that I have sold 100% of my holdings in both Fannie and Freddie common.

It has been pointed out to me by several people that chat rooms like IHUB are making claims that I have sold PFD and am loading up on common. That is a boldfaced misrepresentation of my beliefs unsupported by my actions in the market. While I believe there is a track for common to succeed, it is problematic because of dilution. As the lawyers for Perry have stated, Lamberth provides a path for a $12 damage model. Before there is a dime made on common, the preferred’s will be paid $25 equivalent. There is no other legal basis for the companies to move forward until this obligation is met. I believe that holding the Pref’s is a far more conservative direct path to a financial recovery for investors in the GSE’s.

We aggressively added to our PFD position in Q-1. The sales of FNMAS correlated with a purchase of FNMAT. We captured a 21% arbitrage on purchasing more T’s. At one point 6 years ago we sold T’s and bought S’s for an even larger arb. That theme is in all of our Q-1 moves.

Whenever you see these misrepresentations of my position please help me set the record straight.

Thanks

Tim

Timothy J. Pagliara
Chairman & Chief Investment Officer

615.778.0740 877.262.2650
615.202.8579 615.778.0750
4031 Aspen Grove Dr. Suite 600, Franklin, TN 37067
[e-mail]
CapWealthGroup.com