Replies to post #613139 on Fannie Mae-No Politics (FNMA)

[FFFacts]

Do we know if Nomura included any possible settlement proceeds for common?

I haven't seen their analysis only the headline.

Would you think FMCC or BAC should have a higher P/E?

Yes BAC would. Fannie and Freddie are duopolistic in nature and have the majority of the market. That limits the future p/e because you can't gain more market share when you essentially control most of it. The risk is actually in including more competition.

[kthomp19]

Do we know if Nomura included any possible settlement proceeds for common?

No, they didn't. I have read the report.

It wouldn't make sense to do that anyway: none of the cases are class actions. Any settlement proceeds would only go to named plaintiffs, whereas Nomura's report is aimed at those thinking about buying FnF stock today.

What is clear is that the common has a reasoned worth around $5 in the investment community rather than worthless or near worthless.

It's certainly in the right ballpark. While they get to their number in a different way than I do, they arrive at right around the same place.

If you start with $5 and add UST warrants at $.01 then you can make starting valuation scenarios in the $ 10 range.

No, this isn't what Nomura meant at all. They think the re-IPO will happen at $5. $10 is off the table in their scenario.

Would you think FMCC or BAC should have a higher P/E?

BAC because their business is not as restricted as FnF's by regulations/regulators and charters.