Replies to Post #28337 onFannie Mae-No Politics (FNMA)

Replies to #28337 on Fannie Mae-No Politics (FNMA)

terexberd

05/09/13 11:40 AM

#28342 RE: along4zride #28337

History is repeating itself.

TFWG

05/09/13 11:58 AM

#28352 RE: along4zride #28337

Can't say if you are right or wrong. Your valuation is about as valid as anyone's because of the income sweep. Right now, Uncle Sam is raking in cash without giving FNMA ANY BENEFIT. Most here don't want to see or believe that...especially the boosters and the chart crowd.

I sold into the news and locked in the profit. The street put out an excellent article on FNMA today. All should read it:

van Doorn: Fannie Mae Is a Government Cash Machine
http://www.thestreet.com/story/11918549/1/fannie-mae-is-a-government-cash-machine.html?puc=yahoo&cm_ven=YAHOO

There are three very interesting quotes:
"No matter how much in dividends Fannie Mae manages to pay the federal government, there is no mechanism in place for Fannie to repurchase the outstanding preferred shares."

Day-traders will obviously be looking for very quick gains on the volatile junior preferred shares, for investors who can go in for a period of years, the common shares could eventually provide very large returns, if the GSEs manage to restore the dividends. For investors going in at these discounted prices, the dividend yields will be very high.

The political discussion on the eventual fate of Fannie Mae and Freddie Mac continues in Washington. The prospect of a big payday junior preferred shareholders who scooped up those shares at heavy discounts is distasteful to some members of Congress, but there's no denying the two mortgage giants exist, they are quite profitable, and they are positioned to repay the government, if and when they are allowed to.

There may be various legal remedies for the junior preferred shareholders, over time.

I like trading the CS because of the emotions attached to this stock [ex: just try to post something negative here, you'll most likely be deleted and/or boosters will scream to have you banned!].

Looking at series E for a long play.