Fannie Mae Preferred S (FNMAS)

[Joe Stocks]

If you are thinking the preferreds dividends will be restored prior to exiting conservatorship, I think you are wrong. The main thinking behind me thinking the common have the better risk reward proposition is that I think that FnF will have to be released from conservatorship before the preferred have any chance of seeing a dividend. And, before a dividend can be declared for the preferreds, FnF will need to be fully capitalized. I think stockanalyse said much the same thing the other day. If FnF are again fully capitalized and paying dividends to the preferred, just think how much value that brings to the common. Whereas the preferred will be capped by then market "yield" as I pointed out in a previous post here, the common has no such ceiling.