Fannie Mae-No Politics (FNMA)

[obiterdictum]

There are several options for the warrants:

* The US Treasury can allow the GSEs to repurchase them while in the conservatorship or after they exit the conservatorship.

* The US Treasury can sell the warrants in a public or private auction to the highest bidder inside or outside of the conservatorship.

* The US Treasury can choose not to exercise the warrants.

* The courts may negate and cancel the warrants.

1. Under the conservatorship or after release the warrants can be repurchased by the GSEs and sold to existing shareholders like what happened with AIG. Think Berkowitz who is big time into AIG warrants and stock.

See: http://www.investingdaily.com/11179/aig-turnaround-how-did-bruce-berkowitz-know/

http://www.bloomberg.com/news/2013-04-08/aig-warrants-jump-to-highest-since-first-month-of-trading.html

2. The US Treasury will most likely not offer a public or private auction of the warrants while in conservatorship because of the continued uncertainty surrounding the future of the GSEs. Not many buyers if it is too difficult to navigate the unknowns.

3. Outside of the conservatorship the big funds will come running like Berkowitz, Perry Capital, Ackman etc. as well as small savvy investors who understand how warrants work.