Fannie Mae Preferred S (FNMAS)

[Ebano]

Recommendation: switch prfds. to commons.
I've always said that it is related to the capital structure of FnF, because not only it simplifies the capital structure, but you achieve the recapitalization of FnF.
This financial crisis is based on undercapitalized financial institutions and you solve that problem recapitalizing them.
Recapitalization means to raise capital, that is, issuing more common shares (capital). You can do a rights issue or, if the level of debt of the Enterprises is high, you can convert part of the debt or all to common shares.
Curiously enough, FnF have junior preferred shares in their capital structure, and they are debt-securities but with an Equity feature, so it's better to begin swapping the junior preferred shares for commons shares.
The current conversion ratio of the preferred shares to commons is enourmous, and it should be 1:1.

That's the reason of my recommendation.