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Federal National Mortgage Association Message Board

  • shintasoft shintasoft Mar 20, 2013 4:55 PM Flag

    FNMA Pure Technicals from a bag holder's perspective

    My recommendation:
    If you bought FNMA under $1, you have no reason to sell, why?
    1. FNMA is backed by the government, they are not gonna go bankrupt.
    2. Government changed the term for dividend payment to only require FNMA to pay them dividend if they make profits, and they have been making billions of profits, the old term was that they have to pay government dividend even if they are losing money, they would have to borrow more money from the government to pay the dividend, which is very harsh when the government is suppose to be there to help them, so the new term is much more reasonable.
    3. Accounting changes would allow them to pay most of it's debt back to the government, i don't know the details but that's what I heard.
    4. FNMA has only 1.2b in common shares, the market capital is very low compare to their actual earnings, of course, that's due to their payments to the government, but the new term will allow them to be debt free and government free sooner than people had originally expected.

    I have been holding this bag for 3 years and I bought it for $1.22/share 30,000 shares in quantity, so if you paid less, then you have no reason to sell, at least not until the stock stop moving like a crazy maniac.

    Sentiment: Strong Buy

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