Fannie Mae-No Politics (FNMA)

[kthomp19]

GSEs are valued at $48 to 98 billion by the Congressional Budget Office, in a recent report.

That's their estimate of the value of Treasury's shares (senior prefs and warrants combined) in two of the six scenarios they posit.

If true, assume 8 billion shares, both FMNA & FMCC, on a deluded basis (20% private stock holders & 80% gov).

A Fruedian slip, it seems.

This equates a value between of $6 to 12 dollars per share.

No.

Three of the six scenarios involve a common stock offering at the beginning of 2023. The numbers are in Table 2 on page 15 of that CBO report.

The scenario with a value of $48B on the seniors has the juniors worth full par and the warrants plus existing common worth pennies per share ("between zero and $0.1 billion" for 9B total shares).

The other three scenarios involve a common stock offering at the beginning of 2025 (Table 3, page 17) and give a value of $98B to the seniors, full par to the juniors, and again pennies ($0-0.1B total) to the commons.

I see the gov in difficult position, if they want to maximize their holdings (warrants), the gov will have to release FnF, if they want to do a secondary offering, as no one will invest new money with the current stranglehold.

Treasury can't be forced to give up the seniors by a court, so if they truly want to maximize their total return they will convert the seniors to commons, thereby gaining a stake much greater than 79.9%. That would also place their incentives in opposition to the existing commons, as opposed to the alignment that would happen were Treasury to just exercise the warrants.

Treasury can easily structure the deal to avoid ever owning 80% (or even ever owning 50%) to avoid potential balance sheet consolidation and/or majority ownership issues.