Fannie Mae-No Politics (FNMA)

[Cloner]

http://seekingalpha.com/article/113398-stimulus-plan-includes-tax-breaks-stocks-that-will-benefit?source=yahoo


As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. In effect, this would entitle companies to receive cash from the government that they otherwise couldn't have claimed.

This approach was talked about for a while last year and then the noise died down. If it becomes law, it is not too hard to think of a few stocks that would reap large benefits: specifically, that would be companies that incurred huge losses – there are a few of them out there.

One set of beneficiaries would be homebuilders, which have been taking serious write-downs, but made a lot of money in the course of the housing bubble. Many of them have written down their deferred tax assets, but could now carry the losses back 5 years and get refunds. My holdings in Toll Brothers (TOL), Ryland (RYL) and KB Home (KBH) should benefit. Maybe some of the distressed homebuilders would do even better.

Bond insurance companies such as MBIA (MBI) and Ambac (ABK) could also benefit, again because they have taken huge impairment and mark-to-market losses after operating very profitably for the five years running up to the housing melt-down. They have so far been successful in maintaining their deferred tax assets are good, but carrying the losses back would make that potential problem go away.

How about Fannie Mae (FNM) and Freddy Mac (FRE)? I seem to recall something about how Freddy Mac's entire shareholder's equity consisted of deferred tax assets which they had no reasonable basis to claim they would ever make enough money to use them. Carry them back another few years, there had to be some profits somewhere in there.

With 2009 losses also included, the opportunities to book losses and turn them into refunds could be substantial. Tax lawyers and accountants very possibly could develop refinements, angles, strategies and tactics to maximize the proceeds of this congressional largess.

I almost feel guilty owning the stocks. But now that I think of it, I have another idea. Maybe the opportunity to carry losses back five years should be extended to private investors too. I have incurred some very distressing losses on owning these types of money losing stocks, but if I could just carry them back to the years where I made money and paid taxes, that would be wonderful and in point of fact only fair, just, right and proper. Everyone deserves a slice of the pie, or a spot at the trough, or a slab of pork, maybe a rasher of bacon: that's for sure, this is America in the 21st century