Replies to post #527728 on Fannie Mae-No Politics (FNMA)

[HoldenWalker99]

Calabria expects Treasury to maximize their investment in the GSEs via warrants and senior preferred shares. What that means, I don't know. We'll find out soon. But I'd bet that the warrants are going to be exercised for at least 7.2 billion shares. This torpedoes your entire post, but I'll play along...

$300 billion valuation is possible; it's within the $160-$315 range that Moelis outlines using seven valuation methodologies, albeit on the high end.

New investors would have 50% of the shares for their $180 billion investment, so 50% of the earnings ($20 billion less $2 billion for JPS dividends = $18 billion) which would be $9 billion.

Dividend by $180 billion = 5%.

You're going to get $180 billion investment in common equity at 5% return?

No chance.

Here's some more pesky math:

FnF earn $20 billion annually. Setting aside their assets, just based on earnings, they are worth 20,000,000,000x15 = $300,000,000,000.

To get a piece of the $300 billion, smart investors would be willing to buy 1.8 billion shares at $100 in public offerings (spread over a period of time to meet Calabria's mileposts).
This pesky math would raise $180 billion in new capital. The two corporations would have 3.6 billion shares earning $5.55 per share. Compare it with earings per share of the biggest corporations in the world and pps for these corporations. Fnf would be an easy choice.

I don't believe that the government should get a penny more than it has already swindled, but if they sell the warrants back to FnF for the $20 billion it's already taken past the 10% moment, I would consider it a favorable deal for the government and end all lawsuits.

Also note that Calabria used the term public offerings and not private placement. NO MOELIS! NEVER MOELIS!

[jeddiemack]

Guido,

What would these two do with the 180Billin raised?

If it were me, i'd use it to make some more money. If you figure they'd earn another 7Billion or more.

So, 27Billion in earnings on your 3.6B shares is eps of $7.5 not $5.50

$7.5 eps

Just cancel the warrants and bury them.

FHFA should settle all the lawsuits for a couple of bucks

[Commons_Cancelled]

A Group of JPS Holders is going to make sure Jr. Preferreds make out way better than Commons.

If the Commons try to screw us, we will sabotage the Recap by refusing to Convert to Commons. My Group has also agreed to refuse Conversion if it means the GSEs need to sell more shares.

That means almost all of the new $FNMA shares sold in the SPO will be used to pay Jr. Preferred Dividends. So the GSEs will need to do another SPO in order to Recap.

Which means even more dilution for $FNMA. Existing equity will be worth less than 1%

[GVInvestments]

$100.00 per share will be the future.