Replies to post #223209 on Fannie Mae-No Politics (FNMA)

[Tincupx]

Well yes that is a realistic valuation if everything goes according to plan. Triple digits is at the high end for sure. Besides the fact it is a small percentage compared to ther investments, how does your theory about berkowitz selling a piece of his pie apply to Icahn buying at a price of 4$? I understand your theory of "why would anyone including a fund manger sell any small piece if there was a realistic gain of some 4500%". But the same theory can be applied to the other side...why would someone including a large fund manager buy at a share price 200% + more than berkowitz did?

[big-yank]

I have never bought into the huge number targets like Ackman floated out there. Anything is possible, I suppose, but something extraordinary would be required like Zargis' prediction that the Treasury will simply walk away from the warrants, which I highly doubt is ever in the cards.

Berkowitz made something like 400% on what he sold Icahn. At a $45 share price he would have made 4500%. With those kinds of potential returns, would YOU have sold your FNMA to Carl for $4 if you thought the prospects were strong for that $45 share price?

I don't think so.

[Zargis]

Ackman suggested a high of $24.00(I think it was 24) to $47.00, with full dilution.
He expects higher if the warrants are cancelled and he rightly should as he is suggesting a price that without warrants is 1/5th the value as when they are used by the government.
I.e. without warrants ackman suggests a conservative 10-year view of $235.00

I suspect if warrants were cancelled this price would hit within 2-3 years.


The board has suggested, with warrants expired, as high as $325.00. This is still possible with a housing boom in full swing, in my opinion, or even higher. However, I prefer to take a stance similar to ackmans - and did so before him - but expect a shorter than 10 year timeline. I am confident he stated such a time line for many reasons.

Those who know little on the board expect such a figure immediately. Those who understand it is possible with full warrants removed, expect 2-5 years for that height.

Be well,

-zargis