Replies to post #355483 on Fannie Mae-No Politics (FNMA)

[brandemarcus]

Well yank is not the only one. I am going to wade in on common vs pfd.
A stock is worth expected dividends in the future. In order to pay any dividends to the commons you are going to have to redeem or pay dividends on all pfd. There is no hidden fund for the common. In order for the common to have any expected dividends(and value!) in the future, so will the pfd.

Here is an idea , the gse's can get cheap capital by issuing new pfd stock.
Would it not be idiotic to stop dividends on pfd of 10 %of the amount they could get by issuing new pfd stock to raise the amount of capital they could save by not paying dividends on the old pfd stock. I don't care who elects the board , they wouldn't be that stupid.

Commons and pfd have been all over the map in relative value for the last 7 years as these are just viewed as lottery tickets with an uncertain payoff. Instead of trying to look for a sign in relative prices, consider buying a little bit of the relatively cheaper one , and selling some of the relative expensive one. Comparing the super liquid issues the common is slightly better value today, but some of the less liquid pfd have been dumped by (Perry, Berkowitz, Bradford, nn ,az , Big yank.....?) I don't know who and don't really care. Actually I am the only one on the board who doesn't know who is dumping common or pfd. Once the common goes down a few days the experts will back to tell us who is dumping.