Fannie Mae-No Politics (FNMA)

[KevinLM]

But the extreme bias of the post shows in the phrases "It's wrong for the Treasury to claim the warrants" and "the rightful owners the Common Shareholders". These two things are not just opinions: the first is extreme wishful thinking (the warrants have nothing whatsoever to do with whether or not the seniors have been repaid) and the second ignores the fact that once new common shares are issued, those holders become part of the "rightful owners", even if that includes Treasury (via warrant exercise and/or senior pref conversion) and the existing juniors (via an exchange offer).

I dont see how this post is of "extreme bias" when the post provided calculations for two scenarios, one with and one without warrants being exercised.

Lunacy. If new investors are asked to contribute $67.7B towards a capital requirement of $105B, they will have to get a bare minimum of 2/3 of the overall equity. That means the "extreme discount" needs to be upwards of 75%, not 20%

This is not true. The company has value, the value is not the capital requirements ALONE. It's baked into it's business/moat/people/gse status and of course reflected in PE which they would be paying for.

This shows exactly what is wrong with the thinking in that post. New investors aren't going to agree to a share price and then have the number of shares counted from there. They will insist on a certain number of shares, and the share price gets calculated afterwards.

New investors getting 2/3 of the overall equity, after warrant exercise, will give them a total of around 11.5B shares.

That also means the re-IPO price won't depend at all on what the market price of the common is the day before. The market could push the common shares up to, let's say, $8 on rumors of a re-IPO only to have the offering conducted at $2.50. There is nothing preventing that from happening.

There are 100B market cap companies which are not making any profit (tech companies) that keeps selling shares below market close to raise funds in subsequent offerings. Some even do it twice a year. Tesla sells more shares when it suits them too.

While I appreciate your legal views on the court proceedings I find it really biased you don't see the government retiring the seniors at all. (0% in your book?).Holding commons is a bet on recap and release which needs the seniors to be considered repaid. No new money is coming in if its to owe USD 200 B to Treasury on top of the capital requirements. You can be right with all ur legal views and its still ok with the commons as long as there is a feasible recap and release and that is what the original poster presented.

p/s : I hold JPS and commons.