Replies to post #26951 on Fannie Mae-No Politics (FNMA)

[Cash47873]

IMO that is just one catalyst. The other major catalyst that WILL spark a huge run is any hint from the government on the direction Fannie and Freddie will receive that favors shareholders. The democrats sponsored the bailouts. In the case of F and F they are the poster child for the success of the bailouts. The dems want to preserve the availability for people to receive affordable mortgages that the FHFA via f and f provide. The republicans favor privatization. The political momentum is clearly in favor of the dems right now. And any republicans thinking of re-election has to consider the potentially damaging effects that disrupting the housing recovery would have on their own political careers.
With Obama's proposed announcement of Watts to replace Demarco this is a good indicator that the future of F and F as far as tax payers, homeowners, and especially shareholders are concerned will be a more favorable environment than what has been proposed by Bush appointee Demarco.
The potus is relying on pragmatic bi-partisan congressmen to approve this appointment of Watts in short order as the consequence of not doing so could result in a loss of confidence in a key area of the housing recovery. If that were to happen it puts the tax payers investment in f an f back in jeopardy of being in the red instead of the current black. Who wants to be responsible for that?
The big earnings will beget media attention, lots of it. The media attention will bring more investors and spectators. The result of this will put increased pressure on lawmakers to choose a direction.
The spring here is loaded. It's been compressed and coiling for 5-6 weeks at this current level. The earnings are not baked into the PPS. The only reason this has not exploded up is because there are still those that are short here based on the perception of Fannie and Freddie from wearing lenses from 2008. These folks fail to see the momentum has moved far away from that perception and that via the federal courts recent rulings on fraudulent mortgages sold to F and F and the strength of the housing recovery overall, F and F have shed their blight and are looking rather sexy. So sexy that apparently even big time hedge funds are looking to court them. So how bad an investment are they really when everyone from the government, to the shareholders, to the private equity groups want to own a piece of them?

If you are short here you should hedge by buying aspirin, lots and lots of aspirin.

[GreenGro]

Benny - from my perspective, with each positive earnings reports the chances of FNMA emerging from government control are increased. I don't expect commons to go through the roof on the next earnings report though I do expect nice gains. Ultimately, big profits or not, longs are still dependent on FNMA surviving as a private entity - but to do so, and to even have a chance at rescuing commons, they first need to make enough money to repay Treasury.

Despite the posturing in D.C., I suspect there will not be a whole lot of motivation to wind down a profitable company which can otherwise afford to repay $$$ from the bailout package

[JJ8]

That same thought and question has been on my mind as well... and given the speed of communication, the opposite of what is expected by the 'majority' could be one possibility in the stock market. I don't want to discourage anyone in saying this... as it's based on my own experience and learning in the stock market.

The thought that 'many millionaires' will be made by owning this stock is highly questionable... if one thinks realistically.

The reason is that the stock market happens to be a zero-sum game. It's one place where many have to lose (contribute?)... so that few become millionaires and/or multi-millionaires. Otherwise the stock market itself would not be sustainable. Looking at it as a 'lotto' makes it a little bit more understandable I hope.

Winning in the stock market calls for abilities and skills too daunting... and to seeing beyond the appearances is a must.But I don't wish also the the fact that dreams hopes are also valuable in motivating many to take the challenge and go on learning how to grab the bull by the 'horns'. Just from my own experience. But who knows, may be in this 'brave new world' learning and experience could come faster and more expeditiously... than it came in my younger days. GLTA