Fannie Mae-No Politics (FNMA)

[HappyAlways]

Your analysis is vastly incorrect.

1. The 79.9% free warrants will not be allowed to exercise. They are there as collaterals in case of bankruptcy. If NWS is voided, there will be no more PSPA loan and no bankruptcy. With reference to all other bailouts, the best deal USG can get is to sell back the free warrants to the GSEs (at $210M in AIG bailout case).
2. If the GSEs are up-listed in NYSE, stock price will surge to $10~$15 immediately. Any dilution/conversion/secondary-IPO will be based on the market price.
3. Fannie makes $10 per share and is in some unique business. We can expect the PE to be at 15~20 in the long run.
4. FHFA will need to review the CET1 again. 3% is way too high, given the excessive cost will be reimbursed thru the mortgage interest rate. And, it will impact on any new players to the secondary mortgage market.