Replies to post #340958 on Fannie Mae-No Politics (FNMA)

[Patswil]

Bill Ackmans' PPS estimate was prior to the revelation of accounting fraud---which --IMHO--Is HUGE

[trunkmonk]

those are his estimates based on dollars, all else equal, IMO it will at some point shoot to 60 range from somewhere in the teens, then settle based on future profits.

[Stockman1010101]

from Bill Ackman presentation slides on May 5, 2014:


Net Income to Common $15 $21 $27
P/E Multiple 14.0 x 15.0 x 16.0 x
Illustrative Future Value $206 $311 $427
Diluted Shares (bn) 9.0 9.0 9.0
Illustrative Future Value of the GSEs per Share $23 $35 $47
Multiple of Current Share Price 6 x 9 x 12 x
Future Value of Treasury Warrants $165 $248 $342

[jarenawer]

Again 325$

[rekcusdo]

Im afraid it doesn't work that way.

The warrants do NOT translate into outstanding shares.

Unless the warrants are actually exercised, they don't even show up on the GSE financial statements.

Basically, the way the economics of warrants work, having unused warrants has no effect on the financials...therefore, eliminating illegal warrants have no effect on the financials...it is erroneous to say that the warrants make it so there are 5x the outstanding stock than there would be without them.

Now, if the government actually exercised those warrants, then that would drive down the pps. The current pps does NOT take into consideration the exercise of those warrants.

Also, it is highly unlikely the government would ever exercise those warrants even if they are deemed legal. To do so would make them a fiduciary of all us private shareholders, a position they'd never want to be in.

So, to recap. Yes, as Ackman said..about 30-50pps. But the warrants being made illegal can't have much effect on that pps. Maybe a token 5-10 extra dollars due to those investing who don't know what warrants are or how they work.

[Zargis]

I would drop it. Reckusdoo simply does not seem to be trying to understand or look at your references.

From my recollection Ackman did indeed put in his presentation that this share price ($23-47) was AFTER taking into consideration the US Treasury EXERCISING their shares.

My understanding of it is very much the way you just described.

Be well,

-Zargis

[Zargis]

PERSHING SQUARE SLIDE SHOW

For reference, first link is the actual slideshow. 2nd is another news article of it. Both from May 4th- 6th of 2014.

http://im.ft-static.com/content/images/ebc3f688-d51b-11e3-adec-00144feabdc0.pdf

http://m1.marketwatch.com/articles/BL-MWTELLB-13977?mobile=y&mobile=y

IRONICALLY mike_usa, we are BOTH wrong.

Look at page 104 of the slide show where it clearly shows Ackman’s estimated PPS.

It mentions those numbers with a diluted share count right above it of... 9 billion.

So, anyone take a guess at what that means our estimate is off by?

Hint: a lot. According to multiple sources we are at 1.15 billion common shares now, the presentation CLEARLY states the dilution in relation to shares of the government’s warrant value.
So, not meaning to get crazy but... his estimate of $23-47 would be multiplied by about 7.82
That equates to: $179 - $367.

https://ycharts.com/companies/FNMA/shares_outstanding

Sorry you were wrong mike_usa. (LOL) ;-)

-Zargis