Not to pump but 50s are the key
When the activity increases there, I have noticed that the 'wave' is starting.
Bottling up the price on FNMAS / FMCKJ is what they need. And, can do, as the players are all after the same thing - cheap shares.
Easily done for common, the same reason, and my view has been that these were "throw aways". If they could contain and manage the common PPS, the general view (public, DTs, etc.) was that the franchise WAS worth zero.
Bloomberg and Motley Fool continue to espouse that mindset. The bow-tie guy and his buddy talk about how they couldn't sleep at night with FnF in their portfolio. Their earnings are unsupportable, and the only reason they give as support for this view is that the government is sweeping all profits... yes, I agree the status quo means common and preferreds are worthless.
Well, the government can't sweep from private companies forever and NEVER throw the pfds or common a bone.
For pfds. this is $1.5 to $2B in interest; for common, it is 20% of the profits. Those are not big bones.
Berkowitz saw it first. Actually, Millstein, and before that, Fidelity Income, who own at-least 10% of ALL the preferreds out there.
For common, and this was my revelation, Ackman appearring and putting his stake in the ground recognizes that AFTER pfds. get theirs, the common will do quite well. He didn't move in until quite late, and that was probably because the timing is such that the avalanche of profits and non-action combined to make these "options" move into the money.
The common, thought of as options, has been a long-held view.
As I said, I am now about 20% in common. When they put them on sale (into the $2s) I have bought more.
Feral asked on the other board - "What's the WORST outcome" for common, and if you believe pfds. are 'golden', then the commons shouldn't be worth less-than $7.50 (about a .05 a quarter dividend would support that price).
The US government is sitting on a pile of gold, and they have suitors approaching them left and right, I am quite sure. Corker's comments about his "friends" that are playing this was also a tell. They are "talking their book", but Millstein took his probably 3x profit and now is NOT talking a book.
For those that think 2014 will not be the year that this is resolved, then I have two pieces of advice.
1) Buy more common. $30 B or more added to the option value will be a nice bump in the equation
2) Get your head examined. Corker said the next 1-2 weeks there would be a Crapo/Johnson Bill. The nest has been shaken and the government's case is very weak.
They can bluster all they want, but Epstein and even Corker know they can't sit on this until the end of the year. The courts are taking care of that.
As for point #1 - You still might want to buy common. FNMAS at $10 to $25 = 2.5 and $3.10 to $7.65 is 2.5x.
PS GM giving a .30 dividend proves that the released companies know that there is no way to attract and retain shareholders for the long haul. My .05 dividend per quarter (what was promised in July / August of 2008) would be a nice starting point.
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