Fannie Mae-No Politics (FNMA)

[kthomp19]

Tomorrow Ackman will explain why we may end up with $31-$34. But he is being conservative.

I wholly disagree with this. Ackman's $31 price target assumes that the senior prefs are written off and that Treasury somehow only ends up with 71% of the common. That's (perhaps even better than) the Goldilocks scenario for the commons, which means the $31 represents a best case, not a worst case.

For each 1 percent of the company the commons end up with, the commons would get a 10 cent dividend. Based on a 4-5 percent dividend rate this would justify a share price of between $2-$2.50 share price for each percent of ownership.

Ackman's $31 price target for 18% ownership implies about $1.72 of share price per percentage owned. In your ballpark, but a bit lower.