Replies to post #606500 on Fannie Mae-No Politics (FNMA)

[kthomp19]

The warrants likely cripple any possibility of a successful IPO to build any significant amount of capital.

This is exactly where I disagree. As long as the warrants are exercised before the re-IPO, the new investors won't care how the commons they don't get are split between Treasury, existing common shareholders, and perhaps converted juniors.

You cannot IPO more common shares for capital at a higher price than the existing common shares are worth.

Sure, but that just means that the market price of the common will adjust to the perceived size and dilutive effect of the re-IPO. Calabria's capital rule will go a long way towards bringing clarity to that.

Treasury wants "something" more than what it has gotten to date, but not so much as to kill the release and be stuck with a $200 B draw facility entering a possible recession.

Since Treasury taking a common stake (whether it's via the warrants or a senior conversion) before the re-IPO doesn't hurt the re-IPO effort, this is moot.

If you call the warrants, the fully diluted factor evaporates and brings share price up. The elevation allows any IPO to go forward with a lot fewer, dilutive shares than an IPO at today's $1.70 value.

You don't seem to realize that the re-IPO investors want the common share price (at the time of offering) to be as low as possible. That means a higher percentage of FnF common equity for these investors, which in turn means more dilution to everyone else.

You also haven't addressed the possibility of a reverse split; 20:1 brings the share price over $30, which should be a good base number going forward.

[Guido2]

Why bother answering to him unless you have a conversion scenario for those who crave what they are afraid of buying?