Replies to post #810305 on Fannie Mae-No Politics (FNMA)

[FOFreddie]

HI Red Cloud - Take a look at the Warrant Agreement - personally I did not see an anti-dilution provision but not sure. You can access from the websites - I have previously posted them so perhaps others have access to the Agreements. It would seem that the biggest dilution risk comes with earlier and more capital raises. If we can get credit for retained earnings while the recap happens and lower capital requirements then the common is worth more. The other dilution risk will come with a potential JPS to common conversion which of course will be consensual on a series by series basis. This is not a gigantic dilution risk since JPS is only $ 33 bn or so for a $ 300 bn market cap. Biggest risk is early and large capital raises to meet the required ERCF levels which hopefully will be reduced - perhaps via the proposed Reconciliation Bill. This is another reason why the Warrants are important to DJT - how does the UST justify lower cap requirements if the UST does not have significant financial gain from a near term recap?

[Guido2]

One possible scenario:

If government were allowed to exercise the warrants, it could acquire roughly 7.26 billion shares of Fannie Mae and Freddie Mac for a total cost of roughly $72,600. That's SEVENTY TWO THOUSAND SIX HUNDRED DOLLARS.

NOT BILLIONS!
NOT MILLIONS!
thousands.

If Ackman or Paulson makes a deal with the government to acquire it's stake for $10 billion, they can proclaim themselves heroes for their generosity (yuk).

[Ace Trader]

EVERY Fannie & Freddie investor should by now understand whats at play for 2025 and beyond with the new DJT admin!
Like I’ve stated before! Do your research, it’s your hard earned money your gambling with !!

Shareholders want our companies back !

In order to dangle the carrot in front of the Gov to release the GSE’s, you have to give a little to gain a little !

For the Gov to release the GSE’s

Give up the warrants in order for the Gov to release the GSE’s and to write down the SPSA and LP to $0

Leave JPS as is !

Gov makes another $300 billion with conversion of warrants to common for a total of a $600 billion profit.

Shareholders get there companies back at a share price around $30 ( about the level it was the week before Conservatorship happened)

JPS are not harmed and Dividends turned back on.

Gov not to appeal Lamberts 8-0 win for shareholders. Cash settlement awarded

Large investors like Bill Ackman, John Polsen and Tim etc will make a ton of money with this plan! THAT’S THERE MOTIVATION…….

[FFFacts]

Yes it's called a hedge fund for a reason. I said before don't trust ackman. 10 years ago he had the same presentation dead money for a decade unless he hedged.

[kthomp19]

Hard to believe that Mr. Ackman is publicly advocating for the Government exercising the warrants - a position grossly against his own economic interests.

It is totally reasonable. Ackman's logic is that if Treasury exercises the warrants then they want the share price to be high, which is also good for legacy common shareholders like himself.

What would be against Ackman's economic interests would be a senior-to-common conversion, at which point Treasury's interests would oppose those of legacy common shareholders like Ackman.

So is it possible that Mr. Ackman has some type of counter-position whereby he would benefit substantially from such dilution? If so, how do we get in on it?

His counter-position is owning enough junior prefs that he can still make a lot of money even if the commons don't do very well. In his words, one reason he bought some juniors in 2017 was
"it hedges our risk of a restructuring that disproportionately benefits the preferred versus the common shares".

That is Ackman acknowledging both that the juniors can outperform the commons, and that he wouldn't be able to do anything about it.

I know there's some pretty smart and experienced people on this board - any ideas guys? or do we just have to sit back and settle for what we get?

Buy some junior prefs as a hedge like Ackman did.