Replies to post #608109 on Fannie Mae-No Politics (FNMA)

[mrfence]

It certainly sucks to be a Pref holder... Like an Ostrich with head buried in the sand.

[FFFacts]

Since the dividend on preferred stock is usually a fixed amount forever, once the preferred stock is issued its market value is likely to move in the opposite direction of inflation. The higher the rate of inflation, the less valuable is the fixed dividend amount. If the inflation rate declines, the value of the preferred stock is likely to increase, but no higher than the stock's call price.

Many of Freddie preferreds are variable and most of them are callable. There are many preferred stocks that have traded at prices higher than their call price because of the interest rate regardless of the rate of inflation.