Fannie Mae-No Politics (FNMA)

[JSmith5]

The price of the junior prefs, as a percentage of their par value, is a much better proxy for the probability that the market places on release from conservatorship.

Agree. Probability as well as timing - because of the potential dividends. With FNMAS trading at around 50% of PAR the market may be telling us that release is fairly close to certain, but also that the timing could be soon (as in, before the midterms).

I think both common and preferred fairly reflect the situation that we are in. Commons are a great play on whether or not the seniors will be converted - but, to me anyway, have become a bit pricey (I average below $1.60) whereas many of the JPS 50s can still be bought for about 1/3 PAR. And the proposed creation of a SWF does not bode well for commons more than JPS. We will see.

Nats