Replies to post #810606 on Fannie Mae-No Politics (FNMA)

[Nerdy1]

I agree with a positive valuation on the twins. But I really think the reason we are seeing the volatility is because the government needs to settle with us, everyone knows they stole it, everyone knows they haven’t given them back and took all the money. I don’t see real appreciation until they compensate us. That lawsuit finished in 2023, I’m not a legal person but that doesn’t seem normal to me? Where is the money? Where are all the documents that were hidden? Why can”t we see those? I am long this stock and will continue to be. But I don’t think we will have true appreciation until the legal issues settle. What investment advisor would recommend this? I don’t see any major retirement plans jumping in until it settles, no PERS system at all

[FOFreddie]

Great Post habib7

The news about the extension of the Warrant Agreement was put out by the JB Treasury Department - should we trust it? Perhaps not all of the UST Stake can be sold by Sept 2028 but index funds will likely end up owning 60 to 80% of the float so it should not be a problem if UST stock sales start in 2026.

[Donotunderstand]

sounds very good
thanks

the JPS are not a holding for WORST CASE

if JPS were that certain to hit say PAR=25 - they would be trading 20+ right now - today

the PPS for the JPS suggests there is still more risk than you note

but again - the 25-30 is spot on - IMO - as what we hope to see SOON

[kthomp19]

I don't understand all the hate/attacks on this board. You want just rah-rah cheerleaders? Or should you balance all perspectives?

The hate and attacks are from the cheerleaders themselves. It's about as effective as throwing pom-poms at someone.

Back of napkin FNMA valuation for me...
15B net income x 10x multiple = 150B market cap
150B / 1.15b outstanding shares = $125.5 per share

With warrant conversion:
150B / 5.76b shares = 26.05 per share (12x multiple gets us to $31pps)

If JPS are converted to common, that adds ~$760m shares (depending on conversion terms+new JPS if need capital raise)... stock still $18-23. Lots of upside on common in any of above.

With a $150B market cap and Treasury getting 80% of it, that only leaves $30B of value for the commons and junior prefs combined. The juniors won't convert for less than their full $19B of face value, leaving $11B behind for legacy common. That's a bit under $10 per share, and it represents a best case because the juniors getting a more generous offer and a capital raise would only add to the dilution.

If SP/LP aren't written off, that's game over... >$2 pps.

A senior-to-common conversion doesn't have to push the commons under $2, but it very well could. At the very least it would remove nearly all the upside from here.