Replies to post #7846 on Fannie Mae Preferred S (FNMAS)

[taintedfud]

Newbie here... Could someone give me the low down on these preferred? Thanks!!

like most stocks, just buy low, and sell high. get rich quick.

[raindancer1]

The low down is im the market maker...wire your funds to my personal bank account and I will buy you half that amount of preferreds...then just wait and see if dividends get restored...if so you will get a 3% effective annual return on the initial funds you wire to my account and a retail value of 25 per share. That's the down and dirty, easy peasy...











Disclaimer: this post is a jome

[feralcomprehension]

Newbie q...

There's no delicate way to put this: The situation is so complex that no short answer exists.

On the one hand, you have a fabulously successful pair of businesses which were taken over by the government in a time of stress. This cratered the share price (some would say intentionally).

On the other hand, you have a pair of quasi-government entities which live or die at the will of the politicians who control them.

Evaluated at the business level, it's a can't miss deal: record profits, greater than 90% market share, and a very accessible price.

Unfortunately, given the political nature of the situation, a biz-only analysis falls way short. The congressians could still contrive a way to kill them, rendering your investment completely (?) worthless.

So, you can buy FMCKJ for $5/stub. Eventually it could be worth $25 (face value). Eventually it could be worth zero. Eventually it could be worth some fraction of face. Eventually it may begin to pay dividends again.

Commons are about a buck each. Where will they be in 10 years? Zero'd out by the politicians? $10?

You have to get a grasp of the entire situation (good luck!) and then determine how it fits your risk/reward profile. I will say that was easier to determine when you could get commons for $0.20 and $25 prefs for $0.50.