Replies to post #706408 on Fannie Mae-No Politics (FNMA)

[FFFacts]

Most of the issues are callable but that doesn't mean that the corporations can voluntarily pay 50%. They would need to pay the full price to redeem those shares.

[familymang]

Callable price for the JR PFDS is par $25/shr or $50/shr on some. I don't think any jr pfd owner would be complaining if they get called in.

[Donotunderstand]

all will have a PAR and callable date - 90% are past that date

note

There is not a lot of negative uncertainty

Most JPS are priced to their call date ----

e.g if the interest rate on that JPS is double - yes double - what new JPS paper is issued at --- but the JPS paper is past its call date ----- (so it can be called at any dividend date going forward - any) -- it will not price to double but maybe price to say 25.25 as it can (and likely will) be called at 25 - so paying a high premium is stupid. (And selling it to a client without warning of its true likely value is grounds for dismissal)

There almost never is price appreciation involved with JPS.

In the ideal or norm buy at 25 get the dividend for 5 years - its called at PAR and rinse and repeat . If you get a JPS issue (say IBM) for 24 dollars v 25 dollars -- that is because the cash flow from the dividend PLUS the $1 from moving from 24-25 together are equal to the yield - earnings - profit --- as if you bought at a slightly higher dividend rate at 25 price and 5 years later its gone at 25

All are equated with prices to call date - to worst situation - etc.

Here with F and F --- buying a JPS is a speculation not an investment and the idea is to buy at 2 4 6 8 or whatever and hope you get 25 in say 1 2 3 years