Fannie Mae-No Politics (FNMA)

[kthomp19]

Yes, I gave you some example numbers based on your 75% likelihood of SPS conversion. $38/190 if you want to use that as my position given YOUR input criteria.

This is completely wrong. The share price estimates for each scenario are independent of the assigned probability for each one. The $38 and $190 numbers are purely yours.

If you can't reverse engineer my methods, that's too bad.

Just because I don't show my work doesn't mean I'm not putting in the work.

Neither I nor any outside reader can distinguish between your estimates and numbers pulled from your rear end if you don't show the work. Whether or not you care about the credibility of your estimates is up to you.

The 1% I also did for your benefit as I figured anything higher you would balk at.

I balk at even the 1%. I cannot see any reason for Treasury to cancel both the seniors and the warrants, thereby just tossing their entire equity stake (currently valued by Treasury at $220B) in the trash can for nothing in return. Conversely I can think of at least two powerful reasons (political fallout and precedent) that they would not do so.

Putting a 1% probability on a "well you just never know" scenario might sound low, but using your numbers it skews the results heavily. Reducing that to zero knocks your hypothetical 1200% return down by several hundred basis points.