Replies to post #673046 on Fannie Mae-No Politics (FNMA)

[Stockman1010101]

With all your calculations, the stock has a 517% move up to go to $12.43. So who gives a f__k if they dilute or not. I just care about the end result price from where it is now. I am sure when the big run starts, the price will go where people want it to go and not follow your expert calculations.
Thank You!

[Donotunderstand]

I will take 20 or 13 - just get there now

[ajcntex1]

Looks like you put some thought into you calculations using worst case scenarios, which isnt a bad exercise. So IMO your share price estimate is absolute minimum after recap/release.
But if SCOTUS rules in plaintiffs favor or shareholders win in other lawsuits, then Treasury gets to negotiate with a $300Bil sword of damocles hanging over them. They might be willing to make a deal for warrants or capitalization under that circumstance.

[kthomp19]

You have the right idea here. It's easy to bandy about share price estimates, but far too many ignore the elephant in the room: the share count. Kudos for pointing out that it will dramatically expand, and it's worth mentioning that this will happen at release and thus before existing shareholders get to elect a board of directors.

I do wonder about some of your numbers, though. Are they for Fannie alone or FnF combined?

The companies are trying to conserve cash so they will need to make a deal with the JPS to convert to common at say $3.

The conversion won't be about saving cash, but instead boosting CET1 capital and allowing the common raise size to be easier to conduct.

Companies now have $45 Billion retained earnings, $35 Billion from the Treasury, $35 Billion from JPS conversion, $115 Billion total. Raise $70 Billion and they are out of Conservatorship.

Don't forget that the exit threshold is based on CET1 capital. That means the junior-to-common conversion does add $33B, but the starting point is not $45B but instead -$11B.

Companies now have 19 Billion shares outstanding, Company worth $300 Billion, 23% = $70 Billion, 23% of 19 Billion shares = 4.4 Billion shares.

You appear to be combining companies here so the capital raise number is $140B ($70B per company).



All in all, a good post. Tweak the numbers to be more accurate and you will get a more accurate (i.e., lower) share price estimate.

[MannSinger]

LP=0, Warrant=0, 35B returned to buyback JPS, Raise 140B with 7B new shares at $20

GSE will have $140B+$45B+$8B(Q1 2021) = $193B- Equal to bailout amount.

JPS can keep cash or covert to common @ $20 using $35B.

[Wingsjr]

Horse sh*t.

[sortman]

You don't understand how much dilution the common will incur. 1) Treasury will exercise the warrants, add 5 Billion shares to get Treasury to 79.9%. 2) SCOTUS will rule in our favor and nullify the 4th amendment and so 3rd amendment is still in place. According to court experts, if the 3rd amendment was the controlling document the senior preferred would be deemed paid and we would have been overpaid by approximately $35 Billion. This means that the companies would have started to pay dividends to the preferred, and so the preferred are now at par + 5 years of dividends. The companies are trying to conserve cash so they will need to make a deal with the JPS to convert to common at say $3. Add 13 Billion shares. Companies now have $45 Billion retained earnings, $35 Billion from the Treasury, $35 Billion from JPS conversion, $115 Billion total. Raise $140 Billion and they are 1st step out of Conservatorship. How do you raise $140 Billion? Companies now have 19 Billion shares outstanding, Company worth $300 Billion, 46% = $140 Billion. New buyers need to end up with 46% of the ending shares so 46% of 41 Billion shares = 18.8 Billion shares to sell. Total outstanding shares = 41 Billion $300 Billion Company current stock valuation = $7.31 per share.