All projected share price valuations put forth by reputable analysts are income based. Changes in reserves and capital requirements are balance sheet items.
The G-fees were based on the uptrend shown in Q1 to Q3 2015 10-Q reports and are hardly farfetched.
The part of the analysis I found to be flawed was that the payouts on junior preferred dividends are underestimated since private capital must quickly be raised and additional preferred share issues are the likeliest vehicle by which this can be accomplished. I would guesstimate they are about $1 B on the light side, but even backing this out of projected income generates some lively returns in share price of commons. The $1 B additional amount comes from a 50% increase in new preferred shares that would be issued by Fannie & Freddie for recapitalization.
The reason issuing preferred shares is preferable to raising capital via third party bond offerings is the complexity of collateralizing assets held in trust funds, and the indexing of most secured bond offerings in GSEland that typically are tied to changes in LIBOR. Preferred equity, on the other hand, carries a fixed coupon and would be advantageous as we enter a cycle of rising interest rates. The preferred issues make much better sense.
JMHO.
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