Here is a comment I just wrote to Seeking Alpha Article... Glen how do you arrive at common valuations (5$-8$)? I imagine Gov never wants to own more than 79.9%. I am in common, and but for the fact that Glen has never been right about anything ever... I would be concerned. Maybe I should be in preferred. I have absurd pie in the sky valuations for common, 30-60$. But that is what mathematics show. The liquidation preference is in the event of liquidation, meaning bankruptcy and that is not on the table. The Warrants would give Treasury 79.9% of the common. Do you think in the event of exercising the warrants Treasury would be incentivized to have common be worth as much as possible? Also, Treasury never wants to own more than 80% of the company otherwise GSE debts go on the Federal Govt balance sheet. If that were not the case they wouldn't have taken 79.9% in warrants they would have taken the whole thing and been done with it. The letter between Treasury and FHFA in January this year spells out that the exit must be accompanied by an end to material liquidation beyond 5 billion. Also says that FNMA can issue another 70 billion in stock, I think that would be preferred stock. As Biden administration (or any other admin) that wants to unlock this value will want to keep commons value as high as possible.
I realize that there is a chance that I am catastrophically wrong about all this. Treasury may cash warrants and create sell 70 Billion in common stock (that would be the order they would have to do it..) If treasury does that lawsuits will continue and they will be devaluing their own shares as well. It would also not end material litigation.
Remember if we do it my way, Treasury still gets to tax all of our gains. Common drop lawsuits, there is enough cash, they still regulate via FHFA, gov has cash that they don't have to rely on congress to spend.. preferreds get par, the debt goes off the govt books and dems have money for social-housing engineering.
They get all their money (plus 20% of everyone else's gains.)
Also, Congress and anyone else in the know gets the chance to get rich as well, donors, democrats, republicans, drunk uncles, etc. Hedge funds can give do-nothing jobs to the relatives of politicians and the litigation ends.
Now as you pointed out, whichever admin gets it done first get the proceeds. I would also point out that Trump flat out stating that he will do it if given the chance will push democrats towards exit.
However, I, like Glen have been perpetually wrong about all this, and it would seem that were there to be a shot at all this someone other that the mom's basement internet whackos (myself and anyone else reading this) would be buying this stock.
Lastly, this has the potential to slingshot if anything happens because of short covering and meme stock potential.
Fingers crossed, sure would be a nice story to tell about how Grandpa got rich. I wish you all good luck.
Also, congress could screw this all up, but that would require them to actually get something done...
