If so, why do Perry and Berkowitz primarily hold preferred shares, and why are they investing $ multi-millions to pay for litigation challenges in so many venues. Only Ackman and, to a very small extent Icahn, own common shares. Why does Glenn Bradford only own Pfd shares?
In a 100%, total victory scenario for shareholders in all these lawsuits, commons will be king and can surely go to the moon. I accept that. Unless the government gets mad and simply says no more and shuts them down. But if appeals drag the process out past January, 2018 and the money runs out, liquidation will happen and favor Pfds.
And if only a partial victory for shareholders unfolds in court proceedings, such as Amendment 3 is voided and funds returned to the GSEs while warrants are allowed to be exercised, diluting common equity, and Pfd dividends get restored, the game changes drastically.
If I were a young man with a lifetime of earnings ahead of me, I would maybe buy commons and hope for a miracle. But I am retired and more risk averse and so I prefer the safety of Pfds. There are plenty of scenarios whereby both common and Pfd shares finish in the money, or both get wiped out. Nobody can predict the future with any certainty. At least I don't claim to have that capability.
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