How every equity holder can come out of this somewhat satisfied.
First: if Treasury takes any amount of equity from shareholders it will be considered stolen property under federal law. The Treasury and FHFA illegal exaction due to violating Federal statutes all monies with interest should be returned to the companies. Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise.
The Treasury theft explained no cram-down required wiping out common shareholders. And Treasury collects $209 billion.
No reason to raise new capital by a secondary re-IPO.
Form 10Q quarterly period ended September 30, 2024…
Treasury must cancel the net worth sweep, deem the senior preferred stock paid, eliminate Treasury’s liquidation preference, and replace the excessive capital requirement to a more realistic percentage 2.5% …
At 2.5% of $4.3 trillion is approximately $107.5 billion. Fannie has $90.5 billion in shareholder equity $17 billion short of the 2.5% of the capital if the Treasury would cancel the net worth sweep, deem the senior preferred stock paid, eliminate Treasury’s liquidation preference, and replace the excessive capital requirement with a true risk-based requirement that allows Fannie to price their credit guarantees on an economic basis. Fannie is not bank and should not be treated as a bank requiring bank like capital. Realist the company on the New York Stock Exchange. By doing this the Stock Price will soar. This is how huge returns on investment can be made even if the Treasury exercises the warrants.
With a multi trillion dollar portfolio $17 billion is a small number to reach to get us out of this prison. The company could easily sell in the open market non-cumulative preferred stock to raise $17 billion.
If the Treasury exercised the warrants in full the common stock share count to the Treasury total 4.6 billion shares.
4.6 billion x $45.64 = $209 billion to the Treasury. And the legacy common shareholders collect $45.64 per share.
WARRANTS: Fannie Mae’s common stock outstanding 1,158,087,567 diluted by the warrants at 79.9 percent adds a total of 5,761,629,686 shares outstanding…
$18.8 billion net income per year / 5,761,629,686 = $3.26 per share of earnings,
PE Ratio of 14 x $3.26 = $45.64 per share intrinsic value.
Take it a step further, if the Treasury demands 92% more than 79.9 % warrants the share price to the common shareholders calculates $18.17 per share.
Fannie Mae’s common stock outstanding 1,158,087,567 …
$18.8 billion net income / 1,158,087,567 = $16.23 per share of earnings,
PE Ratio of 14 x $16.23 = $227.22 per share intrinsic value.
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