.........If lack of assets were an issue then true commons "lack" of worth may be an issue but that is not the case here. With Fannie Mae making billions then that is not the case.Commons are simply third in line. Having Fannie giving all profits to the gov't and only being allowed to keep 3 billion on the books is the issue.
..........What's happening is the big money after promoting the "commons", the switch was made to promote the "preferred". They short the commons and make money. They bought the preferred low and now make money on the preferred gains. That is until everyone realizes that with the way things stand now the preferred aren't worth anything either. Commons and Preferreds are all in the same boat - dead in the water until Fannie and all shareholders are able to realize the profits.... when the everyone starts to realize this big money will simply short the preferreds and make money as the PPS drops on those as well. The one thing all shareholders got going for them is if FnF are going to be wound down then first the $117 Billion will be paid off which means Fannie will then be able to realize the profits and not just be giving all profits to the gov't.
.......... Now I'm not saying Fannie will be would down because Fannie is woven into the fabric of our RE mortgage market and a "federal backstop" for the RE mortgage market is a must. However, should a new entity in fact be formed then Sallie Mae is the road map on how it will be done - that is the shares were transfered 1: 1 and the shareholders were first protected then rewarded. But to say the preferred shares are a better investment is nothing but hype with the way things stand now. Just hype.
could be a part of leader in FNMA Message Board...... very Appreciate your Great Post! hopefully can see more this kind the Post...... too bad I have limited English can't write a good post. Thank you!!!
If you look at the past the preffereds topped off at about $25 PPS and the commons reached $70 PPS... so ya the preffereds may give a dividend but it could be argued turning $.85 into $70PPS is a better deal than turn $5 into $30PPS and getting a dividend. Life is full of choices....
Sentiment: Strong Buy
Look, there will not be any line. With fnma and fmcc making billions, everyone wins! Commons will win the biggest! The line is basically only for a complete wind down of the companies. I do not think anyone in their right mind would wind down companies that make billions and billions and dollars. Politics is involved so with some patience, I believe, the rewards of investing will be huge. Strong buy!
And with $38 Billion in divideds being paid already and much much more after 2013's 1st quarter, and none of this money going to the $117 billion owed one might ask why will congress change anything. They got themselves a pretty darn nice "cash cow". Hopefully the same big money discussed above after they have shorted both the commons and the preferreds and have made the most money possible out of the situation as it stands now - will send an army of lobbiests to DC to get it so so Fannie and the shareholders are able to realize the profits. But by then they'll have most of the shares bought on the cheap and will profit as both common's and preferred's PPS skyrocket. That's the big money plan as I see it.... Makes sense doesn't it....