Replies to post #490570 on Fannie Mae-No Politics (FNMA)

[pauljon4]

Just do what everyone else does and put this i$#@t on ignore.

[pka1639]

"But simply wanting the blood from the bodies of the still-living commons because you want enough so you can go dancing without getting tired ... is unacceptable."-Love it!

[kthomp19]

They signed up with the understanding that Preferred shareholders are contractually blocked from just deciding they want more and getting it.

As I have shown in my posts responding to FD, the right to amend the contracts with 2/3 shareholder support is included in every pref series circular.

I mean, technically you are correct because the juniors can't unilaterally choose to convert at any ratio they want, but the contracts do not prevent FHFA and the junior pref holders from agreeing to amend the contract to do a conversion at a specified ratio on a specified date.

Equity raises are an equal risk for all shareholders.

Hard disagree here. Equity raises can't dilute pref shareholders due to the nature of the contracts, so they are a far greater risk for common shareholders.

But simply wanting the blood from the bodies of the still-living commons because you want enough so you can go dancing without getting tired ... is unacceptable.

I think this is a good crystallization of your ideas, but I think they are too idealistic. You seem to think that the junior pref holders should be happy to get par plus dividends, and leave anything that is left to the commons who have suffered oh so much.

But think about who many of the big junior pref holders are. Berkowitz, Paulson, etc. These are big-money investors, and they didn't get to where they are by leaving money on the table. Squeezing every penny is their job for pete's sake!

THIS IS THE NAME OF THE GAME.
THIS IS INVESTING.
THIS! IS! SPARTA!!!

Acting as if a conversion "screws" the commons is a biased perspective, because if the juniors make a generous conversion a prerequisite for dropping the lawsuits, then the only alternative is leaving the companies in conservatorship. That actually screws the commons even more! Go ask John Carney: he thinks that all junior pref and common shareholders should get nothing at all. The definition of "fair" depends entirely on who you ask, and you act as if the junior pref holders must share your definition of fair.

The thing is, a FnF shareholder has the right and ability to buy both commons and prefs. The commons currently have no voting rights or any other place at the negotiating table, that much is clear. What if a common shareholder sees the writing on the wall, chooses to stay in commons anyway, and then gets hit by a pref conversion? That's not being screwed, that's the law of the jungle. Nobody, other than fellow common shareholders, would be shedding any tears.