I agree with Nader's POV on this one and don't want to pass up the opportunity to buy a distressed company showing great potential After the recent price fal I am tempted to scoop up some shares as an intermediate to long term hold.
One big concern: seems like for shares to acquire value FNMA needs to be privatized, but this outcome seems highly improbable based on currently available info. Are there any true investors in this stock? Message board seems like mostly gamblers, some short, some underwater, all using CAP LETTERS to push their agenda. Is it possible to build a case for buying this stock based on something other than hope? Would like serious longs to respond to points raised in the article below. Are they legit?
Investors betting on junior preferreds and common shares are hoping the record profitability will soon allow the agencies to repay the government and offer investors a chance to recover some of their investment.
But there is no provision in the bailout agreement that allows the agencies to repurchase the senior preferred shares from the government and become private.
Political analysts say shareholders betting on junior preferreds and common shares are in "total fantasy" as the government seems to have little inclination to change the status quo.
For one, the agencies are now government cash cows, filling the Treasury's coffers and reducing the deficit .
For another, there is no desire on either side of the political aisle to return the GSEs to their former quasi-government selves. Policymakers agree that they need to wind down the agencies, but there is no agreement on how to do so without hurting the already fragile mortgage market.
Still hedge funds are piling on to junior preferred shares which has a higher claim on profits than common shares. They do so knowing the political risk is considerable but some believe they will be able to win their case in court, if necessary.
Common shares, however, are viewed by
Idk man, to me it looks stupid if the government shut these down. it would be like shooting themselves in the foot. this is one of their biggest cash cows.
But I can't say what they'll do in the future, restructuring, privatizing, I guess if big boys from wall street want it, then it will happen.
I also agree, what could go wrong at this point, stocks went to the bottom but able to hang on with all the distress, I would buy few thousands more of this shares from my IRA acoount and leave it there until housing and mortgage market recovered. This could be a "GOLD MINE". Best of luck
Sentiment: Strong Buy
Its gonna take a while for policymakers to realize that there is no need to wind GSEs down. Dodd-Frank has already fixed the big problems. In the meantime GSE will make tremendous profits. They are too big to stop. 3% mortgage delinquencies is not going to break anybody. They push paper. EZ money. They dont make anything. No factories. Nobody has got cancer from a loan. Upside is enormous even at $5
Thanks for you reply. What is the reason no one is espousing this point of view in the media? Every time they quote a "political analyst" or "government official" about FNMA is it always doom and gloom. Seems there is a concerted effort in the media to promote the view that FNMA is doomed. This is what I am trying to understand. If it's not true, why this biased picture?
What do you think potential downside for this is right now? I'd like to buy tomorrow, because if FNMA bounces back I don't want to miss it. At the same time, I am concerned about selling action the last couple of days which is has been fierce. I don't mind averaging down over time but with a stock like averaging down is more problematic because of the extreme price swings.