Replies to post #585875 on Fannie Mae-No Politics (FNMA)

[Letgoofmyfannie]

"GSE Common shares appear severely undervalued"

--Captain Obvious


"" the report projects that the two will pay out approximately 65% of earnings as dividends by the end of 2023. Howlett further outlined how the dividends ultimately will trade at close to 7% dividend yields with an expected growth of about 4% to 5% on the annual payouts based on an expected 13% return on equity and 35% retention rate. ""


"Money"

--Mr. Krabs

[955]

The Meat and Potatoes:

* Prior to this projected capital raise, we expect the Treasury’s senior preferred stock to be canceled and the junior preferred to be exchanged into common stock at the offering price.

* Pro forma for the exercise of the government warrants into common stock, the U.S. Treasury will own of 33% of Fannie and 29% of Freddie post raise. We expect the Treasury to sell down its stake over a five-year period and to realize $54 billion or more of value.

* It is important to consider that the earnings targets that have been created are shown to be fully diluted and after the capital raise. For Fannie Mae, it sees core earnings estimates of $0.78 per share in 2022, followed by $0.82 in 2023 and $0.86 in 2024. Those estimates for Freddie Mac are $0.77 in 2022, $0.80 in 2023 and $0.84 in 2024.

* The firm also expects that the firms will transition toward dividend-paying public utility models with roughly 4.5% earnings growth on a blended basis and with a low operating and credit expense structure.

* the report projects that the two will pay out approximately 65% of earnings as dividends by the end of 2023.

* Howlett further outlined how the dividends ultimately will trade at close to 7% dividend yields with an expected growth of about 4% to 5% on the annual payouts based on an expected 13% return on equity and 35% retention rate.

[Donotunderstand]

?

hhmm

5 a share target

and GOV to issue out the warrants over time (or exercise and sell over time)

note the GOV - at current ratio of 4:1 has 5B shares

if Gov is to raise 54 B (their number not mine) ---- then they are selling at an average of 10 a share ?

(not sure of any of this math --- as I do not know # of shares foreseen to be issued and did not do the math that takes the GOV share from 80% (today if it wishes?) to 33% ----- too much algebra for now

But that 54 B sticks out as the number of shares is likely 5B as it is now

And what does it mean - to some one like me who is 50-50 common and JPS that JPS would convert "at offering price" ? I can only assume it is straight math (maybe in their report) that a 25 JPS will say get two shares of common if offered at 12.50 etc.

This report - today and maybe known yesterday IMO is what is behind the rise in PPS above the floating zone of 3 to 3.1

Just thinking aloud and counting money as my target PPS to get another small amount of core sold has not hit (I missed in AM)