Wednesday, October 13, 2021 6:04:27 PM
One point I have made recently, after looking at the numbers, is that FnF's enormous deficit to the lowest possible capital requirement in HERA is only slowly shrinking as they retain earnings. A large capital raise will be required whether it happens now or in 5 years.
Right now it would be $115B if the requirement is lowered to 2.5% (from the current 3%) and the seniors are converted/cancelled, and that only falls by a few billion per year because FnF's balance sheets are expanding so quickly. I have used $100B as the ballpark raise size for a long time, and I haven't seen any numbers yet that would suggest something meaningfully smaller.
In addition, Treasury has no incentive to cancel both the seniors and the warrants. One or the other will become a whole mess of new common shares.
Put bluntly, the numbers tell me that dilution is the only solution.
How so?
If I think that massive dilution is inevitable and that the juniors will outperform the commons from any ratio I have seen in the last few years, why would I have a reason to own the commons?
If the ratio ever hits a certain point, probably around 10:1 on FNMAS:FNMA, I would be willing to switch over to commons. Not with too much, though; I will have enough money to easily retire if the juniors just hit 75% of par, and if the commons defy my expectations and outperform the juniors anyway I will have (at least) 100% of par and won't really care anymore.
Bantec Reports an Over 50 Percent Increase in Sales and Profits in Q1 2024 from Q1 2023 • BANT • Apr 25, 2024 10:00 AM
Cannabix's Breath Logix Alcohol Device Delivers Positive Impact to Private Monitoring Agency in Montana, USA • BLO • Apr 25, 2024 8:52 AM
Kona Gold Beverages, Inc. Announces Name Change to NuVibe, Inc. and Initiation of Ticker Symbol Application Process • KGKG • Apr 25, 2024 8:30 AM
Axis Technologies Group and Carbonis Forge Ahead with New Digital Carbon Credit Technology • AXTG • Apr 24, 2024 3:00 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM