tag:blogger.com,1999:blog-6798074091942701235.post5037795231582264203..comments2024-03-29T01:35:09.550-04:00Comments on Can Turtles Fly?: End of Fannie and Freddie As We Know ThemSivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6798074091942701235.post-63068261461337622852008-09-08T14:04:00.000-04:002008-09-08T14:04:00.000-04:00They *should* trade lower, much lower. The option ...They *should* trade lower, much lower. The option value of the common is probably a few pennies per share. The common is now a pretty far out of the money call on the US mortgage market. Fannie is less bad then Freddie, but in both cases the common is worth very little.<BR/><BR/>(John Hempton at Bronte Capital is attemtping to properly analyse the remaining value of the common but admits he really has no idea...)<BR/><BR/>Of course, the stock market being clinically insane Fan & Fred are still above $.70 at the time of this writing and even had fierce rallies during the day...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-14683344735790914862008-09-07T19:02:00.000-04:002008-09-07T19:02:00.000-04:00It will be interesting to see what Fannie and Fred...It will be interesting to see what Fannie and Freddie common stock do on Monday.<BR/><BR/>According to this article, Fannie and Freddie stock remains untouched by conservatorship, and will trade as they always have. This comes directly from Treasury, so I'm quite confident the stocks will trade as normal: <BR/><BR/>http://www.ehow.com/how_4503604_mac-fre-stock-during-conservatorship.html<BR/><BR/>How to Trade Fannie Mae (FNM) and Freddie Mac (FRE) Stock During Conservatorship <BR/><BR/>Whether they trade higher or lower remains to be seen!Davidhttps://www.blogger.com/profile/17732322891474765065noreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-31650775668782302962008-09-07T15:14:00.000-04:002008-09-07T15:14:00.000-04:00And so it ends...Great news for everybody holding ...And so it ends...<BR/><BR/>Great news for everybody holding GSE bonds. These are now nearly as good as treasuries (nearly, US .Gov refrained from an open ended guaranty but $100B each is a big commitment and should be plenty). One way to potentially benefit is to buy Annaly capital, they hold an all-GSE bondportfolio that should appreciate nicely and currently yield about 15% dividend. <BR/><BR/>GSE stockholders are ritually sacrificed. Both the common and preferred only has option value left. If the US mortgage mess does not turn out all bad the stock will eventually be worth something, but the terms of the .Gov capital infusion means they will be at the end of a rather long line to get any share of earnings. The dilution fot the common is far worse then 80%, not only does .Gov get warrants for 80% of common but they will be able to soak up most earnings through their 10%-yielding superprefs. Taxpayers really could make good money from this... ..but are at risk if the mortgage situation really does go nuclear.Anonymousnoreply@blogger.com