Fannie Mae (FNMA)

[kthomp19]

I’m sick of this repeated fantasy about conversion of the seniors. They are not convertible.

“6. No Conversion or Exchange Rights.
The holders of shares of the Senior Preferred Stock shall not have any right to convert such shares into or exchange such shares for any other class or series of stock or obligations of the Company.”

Section 6 that you quoted only means that Treasury cannot force the companies to convert the seniors to commons. There is nothing in any agreement, contract, or law that would stop FHFA from offering a conversion to Treasury.

Here is the prospectus for Citi Series F preferred stock. On page 7 of the pdf it says:

Preemptive and Conversion Rights
The holders of the depositary shares and the Preferred Stock do not have any preemptive or conversion rights.

Guess what happened on June 10 2009? That's right, the preferred stockholders, including Series F, were offered a conversion to common.

To sum up, when you say that the seniors are not convertible you are 100% wrong.

The fantasy that you should be sick of is the idea that the seniors cannot be converted to commons. For goodness sake it almost happened three years ago! Do you blame a weatherman for forecasting a hurricane? Neither should you blame anyone here for forecasting a senior-to-common conversion. Blame FHFA and Treasury.