Replies to post #701892 on Fannie Mae-No Politics (FNMA)

[The Man With No Name]

Thanks for explaining (for the others).

It will come as quite a shock when there is an actual capital restructuring. The funny thing is that the common holders screaming for immediate release will suffer the most the sooner the exit.

Dilution to oblivion....that's my prediction. I don't see how the government is all-of-a-sudden going to see the error of their ways.

[nats1]

kthomp19 - Completely agree with the chart - except that it realistically needs to be based on 3%. Every time this discussion comes up in terms of organically recapping - this song plays in my head:

You can't break the laws of physics - the more the GSEs earn - the more the balance sheet grows. It would take like 40 years of no housing downturn to recap at 3%. By then we would all be wiped out - common, JPS, man, women and child - by the next downturn that would let the Feds step in and seize the GSEs for real this time. The only thing that would prevent this is a Hail Mary legal victory - and our track record so far is somewhat less than stellar.

In regard to commons - I see Bill Ackman's estimate of a potential $30 as very reasonable. Based on $20B earnings, Nomura said that you would expect about 2/3s handed out as dividends. This would be $2B for JPS based on their current rates and $1.20 per share of existing commons if the warrants were exercised. Based on a 4% return - this would be $30. A win, win for all shareholders and a home run for commons if the warrants go away.

I think things are progressing slow but in the right direction. But any talk of an organic recap is ignoring the numbers.

Nats

[Donotunderstand]

701892

and if the LP is removed ?