Fannie Mae Preferred S (FNMAS)

[brandemarcus]

1. The fact that the warrant exists means the treasury has an incentive to maintain the value of the common and not approve additional dilution for the sr and jr pfd.

2. Relative too potential earning power and the amount owed taxpayers, the jr pfd value of 14 billion for freddie and 19 billion for fannie is not that large. Why not just resume the pfd dividends ?

3. Fannie's net investment by taxpayers (85 billion) is greater than freddie's net 47 billion plus freddie's pfd at redemption value 14 billion.

4. Even given full dilution (3.2 billion shares) total market cap of freddie 2.5 billion is less than fnmas (.18* 19 billion) =3.42 billion.

5. At the risk of being deleted-one for one is crazy. That still doesn't mean fmcc common could still have considerable value. The jr pfds are not cumulative and this not a bankruptcy re-org. They have no right to force conversion in the prospectus.