Replies to post #8228 on Fannie Mae Preferred S (FNMAS)

[44centsAKAchoccake]

""It's really bizarre," Kao says of the common stock rally. "I can see the technical reason why you would do it because it's highly liquid, it's been trading in huge volume and I guess you could make some quick money kind of day-trading the thing, but I don't see why you would want to own the common [given the current prices of] the preferred.""

It does seem to put a "floor" on how low the preferreds can go. Higher common stock prices reduce our downside risk, while the upside potential is to go to 100% of RV.

[taintedfud]

"It's really bizarre," Kao says of the common stock rally. "I can see the technical reason why you would do it because it's highly liquid, it's been trading in huge volume and I guess you could make some quick money kind of day-trading the thing, but I don't see why you would want to own the common [given the current prices of] the preferred."
According to standard securities laws, preferred holders would have to be paid in full before common shareholders would be able to claim any of the profits from the GSEs.

i think that is correct.