Replies to post #12719 on Fannie Mae Preferred S (FNMAS)

[rosen62]

What’s in it for common stockholders?

Anybody holding current common stock should be careful with this plan. Current common -to become the old common- will not participate from the new enterprises neither be converted. It appears that as a last resort the plan allows current common to own a very small chunk of the Newco. This plan has been conceived for Jrs. holders. And even at that, Jrs. will also have to learn to live with limitations: no dividends for 5 years and -if I understood the plan- no ability to cash out for 5 years. We all get punished. But some get really punished! Jrs. punishment is a delayed windfall.

hey buddy we are talking finance, not a charity. you are not doing a favor

Actually, they are. The plan was conceived by Jrs. holders and the Jr. peferred shares are at center stage riding the wave. They could have nuked current common if they had wanted. It is obvious they do not care about it and can disregard of any holding they may have. Instead, the plan offers current common a very small participation. AND commoners will have to pony up money to exercise their rights and acquire new common. Not the case for current Jrs. holders.