Replies to post #669120 on Fannie Mae-No Politics (FNMA)

[RickNagra]

Probably more like 0.01

[EternalPatience]

Bradford in his tweet has settled for 1:2 :). So it will come down...

[kthomp19]

I mean at one point there’s about 6.5 commons for 1 FNMAS. Now it’s about 3. Is it going to 1 FNMA for 1 FNMAS ??

Anyone who claims to know, doesn't. For example, at one point the ratio was only 2:1.

For some context you can look at this 12-year FNMAS:FNMA chart. The ratio has been at 3:1 before, and has instances of going both up and down from there. The main thing that chart shows is that predicting the future ratio from the past is not really possible.

It also proves wrong the idea that because the chart trends in one direction, the trend must continue. One example was when some patzer was calling for preferred shareholders to sell their prefs and buy commons when Otting replaced Watt at the head of the FHFA. In hindsight, that turned out to be terrible advice.

The capital raise will be the crystallization point of the juniors versus the commons. The new investors will get enough equity to subscribe the offer, and the price they end up paying might not have any relation to the market price of the commons at the time.