Fannie Mae-No Politics (FNMA)

[FrostyEmpire44]

I agree there should be math behind the number. Let's compare them to the only US company with slightly more assets on the books as reported in the last quarterly earnings. That company is JP Morgan. JP Morgan surpassed Fannie Mae in the last quarter to have slightly more assets on the books than Fannie Mae.

All numbers are as of today's closing price.
JPM has a Market Cap of 822B
FNMA has a Market Cap of just below 11B (as of today)

If analysts looked at Assets we would see FNMA is severely undervalued.

But on a Shareholder Equity Basis of comparison,

JP Morgan has $351,420M per last quarter filing
FNMA has $98,310M per last quarter filing (without taking into consideration of the things Bill Ackman has pointed out wrong with this number...these things would not alter the results of market CAP calculations enough to consider)

This means Fannie Mae has around 28 percent of the shareholder equity of JP Morgan. This would put Market Cap for FNMA around $224B.. this would mean FNMA would have a share price of $193.10 per share.

Not $600B...but significantly better than today's $11Bish number.

JP Morgan pays a dividend on common shares, preferred shares, etc. Fannie Mae does not...Currently.

Share price today for JP Morgan $296.00. Share price today for FNMA $9.48. If FNMA has 28 percent the equity of JP Morgan has, then the share price for FNMA to be equal to JP Morgan would be $82.88 per share for FNMA. That also indicates FNMA is undervalued when compared to the market value of companies not in conservatorship. Getting to this share price would require FNMA to be released and paying dividends on common shares without shareholder dilution.

JP Morgan is considered the darling of financials. So the perception of the company in the eyes of the market has made it probably overvalued. IE it is not something I would buy at current prices because...its too stable when compared to the majority of the financials on the stock market. In essence, it has farther to fall if something rattles the market before its Dividend, buybacks, etc provide resistance to an event which shakes the stock price.

JP Morgan's Share price to Book Value is 2.74 times its book value. Bank of America and Wells Fargo are around 1.2 times their book values.

Fannie Mae's price to book value is .11 or 11 percent. Meaning the share price is 11 percent of what full value looks like. Fannie Mae's price would have to increase 9 times its current value just to be equal to its book value.
This would put the price around $85 dollars per share. That would make Fannie Mae's Market CAP around $99B which would make its market CAP about equal to its shareholder equity.

Bottomline: FNMA is way undervalued and investable. The risk..and the only risk is it will not be relisted and release. However, $600B in market CAP is not realistic given the current operating environment nor the environment after release.

I'm not saying exuberant enthusiasm could not take FNMA to that level..but I would probably be sold out well prior that event.