You cannot short it today or yesterday after 9:58am yesterday. Restriction will be lifted today at 8:00pm EST. You can short it on Monday all the way till it is down 10%, then it gets restricted again for two more days, and you will get squeezed to death.
Disclosure: Long t15 contracts of the $6/$8 Bull call spread expiring in March.
Good luck to all
You are correct! So what would you offer if you were the Govt? I am not asking what you would settle for as a shareholder, and I am not suggesting the Govt acted legally. Just a simple, put yourself in their shoes, in the current reality, how would you make this problem go away? What would your offer be?
Your point of view as a shareholder makes a ton of sense, and I strongly agree. However, from the Govt prospective they will try to take as much as they can. Unfortunately, the lawyers' interest is not aligned with ours. They want more billing hours and therefore drag it as long as they can. Also, I think recapitalization via a secondary offering won't affect price as much due to the cash going straight to the balance sheet and therefore increasing shareholder confidence. But I think your estimate of 10 Bil outstanding is very reasonable as well as the $40.00 per share price.
I forgot to mention that once FNMA is fairly priced I will write some OTM covered calls for extra cash at levels that would be way higher than a tax consequence should the shares get called away.
Good point, but there was a bailout, and other bailouts have been done with Warrants (like AIG) and in a short period of time (due to the crisis and pending greatest depression - I know the argument of the sword to the throat of shareholders/boards by Govt to act immediately or else...), so as a "settlement" and I am by no means a legal expert, I think a deal like this would make sense for all parties involved at this point of time with FNMA being profitable, etc. Yes, the govt will get away with a lot, but when doesn't it? They admit no wrong doing, they tell the taxpayers they made $200 bil on the "investment" and FNMA is saved and common shares get a 10-20 fold valuation from current levels.
I would not pay attention to that website. It claims that GOOG had 44% and SPY pretty much trades at 60%-70% on the short side daily. If 70% trades on the short side and prices are moving higher, there must be something wrong with the website. If on a normal day say 30% of trades are initiated by sellers and 70% are by buyers, then if you have 70% short sellers, that means that 100% of the trades were initiated by sellers. I just find it hard to believe.
All right, shareholders and visitors. Put yourselves in the govt shoes and share with us a strategy that helps you save face, make money and keep you out of jail, lol.
1. Take FNMA out of C-Ship
2. Re-list the stock on the NYSE
3. Eliminate 10% interest and return all interest and profits back to company.
4. Convert Warrants to common shares
5. Declare one time dividend of about $25.00 per share which is equal to all the money given back in number three above (This way the govt gets 79.9% of that money back, and it gets taxes equal to 15%-20% of the money that goes to share holders as well, so the net effect is the govt gets back about 83.5% of the money it gave back to Fannie in number 3).
6. Declare appropriate Quarterly dividend.
7. Sell the shares obtained in number 4 to the public in an orderly fashion for a price of about $45 per share.
So how does the govt fair in this deal?
They get to keep 83.5% of all the money they already took which should be enough to cover taxpayers investment. Then, they collect an additional 200 billion or so from selling the stock they converted in number 4.
How do shareholders fair?
They get a $25 one time dividend.
They get a $2 annual dividend
They get to hold shares in a $250 Billion company (@$45 per share) that can easily go to a $500 Billion company (@ $90 per share).
I think everybody wins with this approach. What do you think?
Greetings from Southern California,
First, I don't plan on selling the stock, because I believe it will be a dividend paying stock and will be valued like a utility company and priced as such = Stock price is derived from current interest rate and the dividend the company pays. The yield today for such stocks ranges between 3.0%-4.0%.
Next, I understand there are a lot of assumptions out there, but the one I subscribe to is that Fannie will generate about 25bil-30bil a year in profits before taxes. That will be approximately $2.71-$3.26 per share fully diluted (after taxes). If FNMA pays out 75% of net earnings in dividend, then the dividend will be between $2.03 and $2.44. At a 3.0% yield, the valuation will be $67.66-$81.33. At a 4.0% yield the valuation will be between $50.75-$61.00
So my price target is $50.75-$81.33 and I see the dividend between $2.00-$2.50.
My thinking today is to hold the stock and not pay capital gain taxes which would reduce my buying power significantly (approx 28% in California). I will gladly collect the dividend and hedge against rising interest rates when I need to. If I want to buy other stocks, I can use margin, currently set at 1.57% under 100K or 1.07% over 100K at Interactive brokers.
Of course, the balance sheet can add additional value to the shares and should miracles of "returned interest" or "zero dilution" happen then the price can be as high as $250-$400 per share, but the odds on that are less than getting struck by lightning :)
I will post what I would do if I was the government in another post.
Disclosure - Long 14,100 shares and looking to buy more.
Sentiment: Strong Buy