Dont bet on it pal. This isnt a pinky pump n dump. FnF is a short killer... The recent selling of stock by insiders was also a exercise of legacy options they had that were left over prior to Fannie Mae entering Conservatorship. If you review the past 10-ks filed by Fannie Mae you can see most of these sellers were exercising options that were set to expire in the next year(in other words they had to take them or lose them). The options were priced at pre-recession prices. So when they sold they ended up for accounting purposes of taking a loss. Instead of getting shares at 60 plus dollars (the original option price) they took a loss by selling them at 1.46-3.66 a share. In other words, they had to sell the share to take the "big loss" tax credit. In some cases they can carry this loss forward in future years as a write off against future income. Also, by selling off their common stock these individuals put themselves in line with the rest of management who do not own shares of FNMA. In other words, they could make a little money...get a big write off... and toe the party line with the rest of the executives in the board room.
the second part of the story is that FNMA cannot issue stock options as payment of services for employees while under conservatorship. This is explicitly stated in the 10-k's. Also, management is forbidden from making option calls, puts, etc on stock issued by Fannie Mae..also in the 10-k's. So effectively you will not see BUYS made by these employees while they under conservatorship. So insider buying is just simply not going to be seen/reported.
What would be interesting to see if the Fannie execs were buying Freddie shares or vice versa. They wouldn't be required to report because they are not "insiders" of the opposite company. However since their businesses are so similar the results would be predictable enough for an insider in one company to profit off the mutual rising tide...if there truly is a glimmer of hope to be had.
Of course this pure conspiracy theory.
Another point to remember is that the conservatorship could end without Congress coming up with any action plan. The deal between the Treasury and Fannie/Freddie could once again be "modified" without Congress involvement. If Fannie had taken the DTA credit this quarter without the "modification" Fannie would of had cash to pay off a major portion of the Senior Preferred Stock which was allowable under the previous modification of the agreement. Freddie and Fannie were put into conservatorship without Congressional consent because it was not required. We currently have a Congress that its first budget in almost 6 years. So we could be waiting awhile for them to "figure out" what to do with Freddie and Fannie. The longer they don't do anything the more likely nothing will happen except a push to let Fannie and Freddie come out of conservatorship because it's debt to society has been paid.
Why do I think this will happen....well lets first consider which Political party takes credit for the creation of Fannie Mae. That would be the Democratic Party. (Fannie Mae was created during the Great Depression to provide banks with the liquidity to lend out more money.....to help resolve a Housing crisis. When Fannie Mae was made into a GSE, they created Freddie Mac to keep Fannie Mae from being a monopoly. What did Fannie and Freddie do in the last 5 years? They provided liquidity to banks so they could resolve the housing crisis. It turns out that money that was given to Fannie Mae and Freddie Mac was used to Triple the assets on the Balance sheets of both companies. Hence, the reason why record profits are coming in off even a modest recovery.
If Fannie and Freddie become super solvent/profitable....which party in power can claim Victory for saving Fannie and Freddie....you guessed it...The Democratic Party. Whose legacy can be cemented if he lets Fannie Mae and Freddie Mac come out of conservatorship before Congress takes action? Who will donate millions if not billions to those political coffers to make that happen...Wall Street.
At one point in time this week I was up 1700 percent...who wants to slow the train down to jump on board before it leaves the station. . 1.5 MILL GOING TOMMORROW. Watch the gap and then you can tout 1.50
Everything i post is my opinion and not to indice or direct anyone to buy or sell a position.
