"Those two things are not mutually exclusive, instead one is a subset of the other. Probabilities are quantified possibilities."
Agreed. The difference is that some are blinded by what they *think* will happen, ignoring other possibilities. But the reality is, between whatever you calculate as the most probable route vs the field of all other possibilities. The outcome is probably something we aren't fully expecting. It's like the gameshow Deal or No Deal. At the end when you have your suitcase and the last suitcase from the "field." The field is the more likely to hold the higher amount. But players are reluctant to relinquish their pick because that's the path they chose. The closer they get to the end, the more they think their pick is right.
"How do you calculate that? When you wrote this post FNMA was around $1.50 and FNMAS around $5.00. FNMA going to $2.00 would be a 33.3% return and FNMAS going to 50% of par would be a 250% (2.5x) return. Any combination of FNMAS and FNMA would have a return between those two numbers."
Calculated from my cost basis. As the market fluctuates, I need to adjust my ratios as I accumulate. I haven't accumulated since common went back over 0.65. I've averaged down to roughly $1.00 per common, and less than $0.068 per $1 of JPS redemption value (mixed $25s & $50s).
"That depends on if you own enough of the juniors. Even if the seniors are written down, it's possible for warrant exercise + junior conversion + capital raise to dilute the commons enough that the juniors still come out ahead."
Yes, and not knowing how much of each of those will actually happen, I've positioned myself for as many variations as I can. If junior come out ahead of common, I win. If common realizes a higher multiple than JPS, I win more. I don't think Common nor JPS are getting wiped. I think there is upside in both.
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