Replies to post #766537 on Fannie Mae-No Politics (FNMA)

[kthomp19]

Your "75% chance of conversion" is no more valid than me giving it a 20% chance of fruition, using the same set of facts.

Where do you get 20% from?

The Supreme Court Collins ruling removed any incentive for Treasury to give away its senior pref LP, and the fact that the conversion almost happened (as opposed to writedown) shows what Treasury's playbook as an institution is.

Since it didn't happen in 2020, I can say it's less likely to happen while you can say it's more likely to happen.

That's like saying that since the last hurricane barely missed you, future ones are less likely to happen. It makes no sense to me.

It's also like the last two survivors in a horror movie saying "so far everyone that has been killed is not us, as long as that pattern continues we will be safe forever!"

Bad logic.

Only time will tell who is correct, not the number of posts we spew repetitively.

Of course. Even though one can assign an opinion of probability to a binary event, it will either happen or it won't.

Still, the probability opinion matters. Since I think the commons are worth 25 cents (perhaps even less) if the seniors do get converted to common, a 75% chance of that happening severely limits what I would be willing to pay for them right now.

In the end, I'm not trying to convince anyone except myself what to buy/sell/hold/avoid. My estimation of the likelihood of a senior-to-common conversion, combined with current FNMA and FMCC market prices, means I won't buy the commons.