Replies to post #508759 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Why not a raise of $100B at say $100 a share? or 1B shares so new players end up with 1B + 1.8B = to around 35%?

Because they would have no reason to put $100B into companies only worth $200B or so, and have that only translate to a 35% ownership stake.

$200B * 0.35 = $70B. They would be investing $100B and end up with shares only worth $70B. There is no reason for them to do that.

The $20B per share version gives them a nominal profit ($200B * 0.735 = $147B), but that might not fit their certainty equivalent. $100B in cash might just be worth more to them than 73.5% of companies that could be worth $200B if everything goes right.

The interesting thing here is assuming the worst; sure at $.001 a share they only issue 400B shares... but really, that's a little incoherent to justify.

If you're saying that the price is too low and the share count too high, a reverse split solves both problems.

if not, why not $100B at $150 a share... see it can go the other way as well.

Because $100 per share made no sense, therefore anything higher doesn't either.

[Guido2]

Great post jeddiemack.