To the best of my knowledge (you may want to verify it yourself) the government owns 79.9% of the senior preferred shares and most of the junior preferred shares are owned by the hedge funds. The junior preferred shares had their dividends suspended when FMCC went into conservatorship status in 2008.
The “79.9%” owned by the government was designed on purpose--with 80% or more, FMCC would be considered a federal government owned business and not a GSE or in conservatorship status. Paulson, who made a bulk of his fortune on the housing collapse, had a hand in designing FMCC’s 79.9% conservatorship status. The 79.9% left the door open for possible future privatization—this is what we’re betting on.
Paulson made a fortune on the housing collapse and if he gets his way he’ll make another fortune on its recovery.
The 90% dilution figure I used is a “rough” and conservative estimate. Please do your own DD and let me know if you find anything different.
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