Replies to post #783050 on Fannie Mae-No Politics (FNMA)

[blownaccount9]

I didn’t say you were stupid. I said that metric is stupid. Long handing my short hand doesn’t make a difference either most are aware of how EV is calculated so you aren’t teaching anyone anything. Most people here hate me because I bought pref shares along with common so not a tribalism thing either. I feel shares are worth minimum $20-40 in the next 1-2 years and more the longer earnings are retained.

[Wise Man]

For the Enterprise Value, you have to add the Preferred Stocks in the formula that you've pointed out:

Enterprise Value= Market Capitalization + Market Value of Debt – Cash and Equivalents

In a takeover, you only need to buy the common stocks, because they have the Voting Right and they are the real thing: a legal claim on future profit, plus Retained Earnings account.
The market capitalization (number of common stocks x market price), assumes that the market price is a fair value because it discounts all available information, which isn't our case in a Machiavellian Conservatorship and a Separate Account plan in accordance with the law.