Replies to post #438161 on Fannie Mae-No Politics (FNMA)

[bradford86]

the truth is we dont know

and right now both commons and preferreds have an intrinsic value of zero unless something happens.

that said, in one case, contract claims were remanded to lamberth's court

so it's not a total sweeping loss.

[mhill_fin]

The common stock ship has sailed years ago. Everybody knows the GSEs will not be constituted as before. After 80% dilution, the common has a ceiling of maybe 12 bucks tops.

[kthomp19]

FALSE. FNMAS can only see a max value of $25 or approx a 4 Bagger. FNMA could see with earnings of $12/share with a PE of 20 approximately $200 bucks a share.

Nope. FNMAS trades around a 2.2:1 ratio to FNMA commons right now. If FNMAS holders are offered a conversion above that ratio, say 3:1, then a dollar invested in FNMAS right now makes about 37% more than a dollar invested in FNMA.

An attractive conversion offer is the best way to settle the lawsuits without the government having to pony up any cash.

For other series, those that are less liquid and with lower dividend rates, junior prefs outperform commons ever more.

And this is all true even if the warrants are cancelled or otherwise never exercised.