Value Microcaps Zip Code Changers

[littlefish]

From article:

"Let’s face it, what value is there in a stock where you have no vote, right to dividends or profits? Let alone the fact that each company is in debt to the government by over $160 billion. Then there is the government plan to shrink them, perhaps into nothing. The recent profits are rather meaningless in this light."

I believe "Let alone the fact that *each* company is in debt to the government by over $160 billion" is a false statement as of today, maybe just a misstatement not sure.

The guy is assuming quite a bit IMO. First, they're govt run yet we have no way of predicting how govt might act on the companies going forward other than there is a vague goal of trying to wind them down and retrieve what is still owed in the process.

Why is it vague? Well, who is going to take up the huge amount of slack to guarantee home loans without Freddie and Fannie in the next few years? A few years have already passed and little has changed on the private mrotgage market side in terms of size of loans they're cannibalizing from FNMA and FMCC IMO.

Granted the quality of the ports has increased a huge amount at FNMA and FMCC so that to me at least kind of begged/begs the question if they get wound down then those ports have to go somewhere but where? The private sector? How? What about the cash being generated in the meantime if it is becomes substantial enough to pay back what is owed to govt? Think of the leverage with those loans as home values improve given the bad loan reserves. Look at the loan loss reserves FNMA had, still 10s of bilions of dollars while their loan portfolio has become waaaay stronger than it has in years.

LTV ratios are way better, credit scores to lendees way better, etc.

My question is from a political standpoint if FNMA can generate $17 billion profit in one year and owes I think less than $100 billion now to govt, why would the govt purposefully force the company to wind down and not be able to pay back what it owes taxpayers? Those 3 business units FNMA has are worth a lot in the recovering housing market IMO but the size of the loan ports is so huge the private sector won't be able to swallow it any time soon at all IMO. If the ocmapnies can egnerate more than what they owe the govt then I think there will be some heat ot keep them going and not iwnd them down completely. the longer they exist and make money especially if already paying all that they owed, the more pressure there may be to allow some profits back to somewhere like shareholders? A chance at least.

Anyway shooting from the hip on this post with not much time so all IMO and probably have some holes. I don't have much of a position right now but do have a little.

It is certainly quite risky as an investment when it is so foggy trying to make sense of the potential answer that is out there now (wind them down whether they pay back or not). Revamping might be more likely but who knows. They have laready changed what they firs tstarted out ot try and do (like getting rid of the 10% dividend payments) so it is a crap shoot with all the political fingers fodnling the futures of both.

All IMO only, good luck.