Replies to post #774037 on Fannie Mae-No Politics (FNMA)

[JOoa0ky]

Because Fannie owes FNMAT holders $25 per share...

[bradford86]

In my view what is going to happen as part of this recap and release the most likely scenario is fannie and freddie will work with jps holders to convert them to common shares after the us treasury gets out of the way blocking the companies capital structures from laying siege to all their earnings forever. The second alternative would be just for the jps dividends to turn back on at that point when the companies start paying common dividends — which they will need to in order to attract 3rd party ipo private capital for the government to sell their stake

Two paths to par in my view. I see a 0% probability of redemption for cash.

My perspective is backed up by the government’s cbo report where they acknowledge that receivership is the only way to screw jps which have anti dilution protection and dividend preference to common shares

[LuLeVan]

FNMAT shares will only reach an equivalent price of about $25. FNMAT themselves will not rise to $25.

The increase in value will be achieved when they the JPS are first converted into legacy commons and then (with a reverse split) into new commons.

This is likely going to happen during a period when all shares are suspended from trading due to recap/release. When you check your account afterwards, there will be no more FNMATs, only new shares (ticker: FNM?).

If the IPO price of FNM is $50, for example, you will find one FNM for every two FNMATs you previously owned.

Tell me though, because I own FNMAT, how do we suddenly see $25? I never really understood that.

[bradford86]

when the restructuring takes place and $FNMAT is converted to common the shares you end up with will trade at a price x share count that is pretty close to $25 in a conversion scenario -- and in a lower probability dividend turn on scenario, the price of the $FNMAT will rise because people value 8.25% dividend rates... possibly to above $25.

[Donotunderstand]

I suggest not buying and selling

or - maybe - better said --- the buying and selling is based on an expected future earnings --- amount and when

the PPS - plus or minus greed or fear is all done by 10000 models that estimate earnings per year - out say 10 years for a company and then the stream of earnings is discounted to the present. Fancy name is NPS of future earnings

YES - that is what drives price
For example a growth company might be valued at earnings per year of 2 4 9 19 ----- so what if the expectations change due to earnings and management guidance to 2 4 5 8 ---- wow that stock will take a hit