Welcome. I bought my first shares of stock in 1972. I personally think Fannie Mae (and Freddie) are the best buys in the stock market today because:
1. These stocks traded for "about" $60 per share, before the 2008 crisis. They were considered a "widows" stock, where widows could depend on the regular dividends for income. They were used for things like police pensions. In 2004, Fannie earned 4.9 billion, well before the 2008 crisis.
2. The current fannie income is in line with the 2004 figures after deductions for DTA's and one time settlements.
3. Fannie likely would be paying shareholder dividends if not for the government taking of fannies profits in 2008.
4. There are multiple lawsuits against the government where at least one is making significant progress for shareholders. Most longs agree, the government can not continue lawless taking of fannie mae profits indefinately.
5. Institutions are buying fannie, and currently own about 11% of the stock. These include Fairholme Funds, and Billionaires Ackman, Icahn, Berkowitz and others.
6. Given that this stock was about $60 per share, with earnings in line with those today, and, a good chance for a favorable outcome with the courts, most longs feel the stock is way undervalued and will again be worth about $60 per share in 2 - 5 years, or even sooner with some early favorable court decisions, as well as relist, with an end to cship.
7. Downside is the stock is driven by news. And there are many, many, people with a dog in the fight who want fannie to go down in flames including several politicians.
8. Patience is required. If you unrealistically hope this will be $60 by Christmas, you will almost certainly be disappointed. You will have more downturns and you have to be able to hang on, even when there will likely be some bad news to come. GLTY
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