There is no loan to pay off. If there is, it could be found on the consolidated financial statements.
Do not be fooled by the inaccurate language of ill informed journalists or the few negative pundits and politicians with squeaky wheels.
The pps of the preferred and common stock is determined by the purchasers and sellers who order and pay for shares in various ways at all the different levels - MMs, market specialists, ECNs, wholesale, retail, and individuals and types of trader, institutional, fund manager or day, swing, short term, short, and long term traders and holders. What influences the purchasers and sellers ranges from the color of the sky, to reams of DD research to gut instinct to inside info, to household needs, personal dispositions, what others do...you name it.
The conservatorship is not permanent. It is a temporary status and can be removed at any time under a host of different influences. The rise in the GSEs common stock pps is one such influence and unlike previous increases and decreases in price this time with the greater increase in price there may arise the tendency to hold the common stock for longer and longer terms creating a mass of shareholders who are concerned with the companies future that are now a source of their wealth. It will not simply be to drink at freely flowing trough of sweet water and then running off to another trough somewhere else when thirsty.
It aso is becoming gradually more and more expensive and inconvenient for the smaller individual traders of all types to not hold for longer terms. For the smaller traders, flipping and swinging results in greater and greater re-entry costs, less profit taking and exclusion from the moving market. For shorts, the current upward momentum makes betting against the GSEs hazardous. Bigger and bigger players who purchase a million or more shares over time and anonymously will enter as the pps increases and hold and sell for profits as needed without selling off.
As the the float moves to stronger hands and as shares become fixed and restricted by fund type, the demographic of shareholders will change and move towards institutional holders as it was before. This will restrict share supply and demand and price will rise accordingly. The current type of trading will still exist but will diminish in size compared to more long term interests.
We are heading in this direction or so it seems. A higher pps is what the common stock needs to become stable and to remove the fear of huge pullbacks, unseemly corrections, foolish sell offs.
The President and his administration will be coming out with a future plan for the GSEs. This political news will have a tremendous impact on the stock price. Who knows if the inside info on that plan has already been leaked and what we see is the anticipation of that move?
The Street.com made the silliest of articles as to why there is an increase. The increase has been going on before Nader's letter and housing data reports. Something else is at work.
Semper Paratus
AI
