Fannie Mae (QB) (FNMAH) Share Price

Right now Fannie and Freddie are under the thumb of FHFA, a government agency. Fannie's and Freddie's managements are micro-managed by these inexperienced people who have only one agenda. Keep the cost to mortgage holders down. They have no plans in improving and increasing the profitability of Fannie and Freddie thereby bringing much more value and profit to their owners (the shareholders and US government) and ultimately reducing Interest rates for the mortgage holders because private (Big Money) could get involved and drive/compete the prices to much lower interest rate for their customers (mortgage holders).
So IMHO, Fannie and Freddie could make much more money if they are privately managed and controlled like they were before 2008. The shareholders can start to get dividends payouts which they are being denied now, the price of FNMA and FMCC shares could run much higher than where they are now, and management can run the business in a way that makes everyone connected with Fannie and Freddie much richer. After all wasn't Fannie and Freddie created to save/reduce money for their customers (mortgage holders), while at the same time bringing greater value to their owners?.

GLTA

Craig Phillips, just hired by Freddie to handle ‘regulatory and conservatorship affairs,’ on how the government has been more than fully repaid on its investment in the senior preferred. Jan 9, 2025

https://x.com/BillAckman/status/1877515862103445530

Good morning, Fannie/Freddie fam. Great close heading into a long weekend yesterday.

I’ve not been on this journey nearly as long as some of you. And I’ll be the first to admit that I don’t understand every intricate detail of the Fannie/Freddie saga. I'm learning. I appreciate all the input and perspectives.

I just wanted to share this...and I know it may bring out some "apples to oranges" arguments. But this is Farmer Mac. They had a $1.5 billion net worth at the end of the third quarter last year. The twins are exponentially more valuable.

When I see something like this, the eternal optimist in me can’t help but wonder what our possibilities might be when we’re set free.

GLTA

Total agreement by all who understand the GSE reality on the ground.
Now Congress has to act on this GSE understanding.

Treasury DOESN'T SAY Fannie/Freddie owe $200 B

quite the OPPOSITE - Craig Phillips who WORKED inside TREASURY

(as a Deputy Treasury Secretary)

has Publicly said the TAXPAYER has BEEN REPAID - more than REPAID !

End of CONVERSATION ! ...

Navy
I do not see you answer questions much - other than to bash someone

but

Question

That 94.7B reserves ----- how does it treat the 200B that Treasury says F and F owes them ?

VERY serious question

Recall - i want LP/SP wiped to zero for 300B cash paid !!! but while the LP/SP are still there - I think these are misleading numbers

Please help with detail

Thanks

they found it

banks and others have fed F and F bad paper disguised by PROs ---- some will slip in --- and some of us applaud F and F for finding the fraud and how they will now recover any financial damage --- as before on the Billions

Do you think you or anybody could run F and F - with its Trillions - such that they never agree to package into F and F MBS paper any mortgage that is not solid

A tip of the hat to you if you can

I see huge profits

Why do you say the GSEs are run poorly

AND ---- I think the negative reserve is there because the GOV accounting requires subtracting the LP/SP obligstion

While these obligations - per Treasury - exist --- WHEN that market hits zero - F and F have paid the LP/SP off and will THEN need to add the reserve that Calabria put on us --- as we are square with Treasury but have no available reserves

That is my read of how the TREASURY reads it - and right now that is all that matters as we lost and lost in court

Where am I wrong ?

Privatization could trigger increased innovation and greater market participation, resulting in more competitive mortgage pricing, says Ralph DiBugnara, founder of Home Qualified, a digital resource for real estate buyers and sellers.

"They may be able to create more products with larger reach to more customers," he says. Without federal restrictions, DiBugnarra says, Fannie and Freddie "will have more freedom to go outside of the box."

This says it all. No need to speculate on the negative side unless you are trading on the negative side.

GLTA

yes
and they will be right

but not so right if it moves up FAST another 30-50% (or likely 100-200% on THEIR purchase price)

but totally right if it drops and drops

Fannie Mae: Checklist For Privatization

Bottom Line

https://seekingalpha.com/article/4758749-fannie-mae-checklist-for-privatization

Fannie Mae shares are at a critical juncture. With shares seeing more than a 500% increase
in the last six months,

I think optimism is rising that Fannie Mae will be able to privatize
and break out of their conservatorship.

This is a big opportunity, but I think the real risk now is not that Fannie Mae and its supporters

don’t pursue privatization, but what cost comes with it. How we can get mortgage rates lower is key.

With this, I remain optimistic on Fannie Mae,

and I continue to believe shares are a strong buy.

Co-Authored by Noah Cox and Brock Heilig
Feb. 15, 2025 - Noah's Arc Capital Management


Senate Finance Committee Considers Treasury Secretary Nominee Scott Bessent

Summary


--- Fannie Mae (FNMA) presents a significant opportunity, especially if privatized,
with potential stock value reaching $31-$34 per share, supported by Bill Ackman's analysis.

--- Key considerations include maintaining low mortgage rates and addressing the senior preferred
debt on Fannie Mae's balance sheet, with cautious optimism on both fronts.

--- Housing Urban Secretary Scott Turner's recent push for privatization and Treasury Secretary
Scott Bessent's focus on mortgage rates are pivotal developments since investors focused on the companies last month.

--- The main risk is the potential increase in mortgage rates post-privatization, but waiting until 2028
when Treasury warrants expire could mitigate dilution concerns for investors.

Investment Thesis

The Federal National Mortgage Association, also known as Fannie Mae (OTCQB:FNMA), is currently one of the most talked-about opportunities among retail investors, due to its potential upside. Billionaire hedge fund manager Bill Ackman is a big fan of the stock and argued in a January 16th presentation that shares have a lot of upside in the event of a spin out.

I believe one of the main keys right now is not if the Trump admin wants to privatize, but when. I think it’s quite likely that this will happen, so the main question surrounding the performance of the stock right now is how it will happen.

The administration has signaled that any privatization will need to answer a key question: will privatization keep mortgage rates low? For investors the capital stack question remains: will the senior preferred debt be wiped from the company’s balance sheet? On both of these questions I remain cautiously optimistic.

For now, I am a strong buy (much like how I am on the sister company Freddie Mac (OTCQB:FMCC), but I see these as two main questions remaining.

Background

Last month, I wrote an article about Fannie Mae’s sister company, the Federal Home Loan Mortgage Corporation, also known as Freddie Mac (OTCQB:FMCC). In this article, I outlined a lot of the reasons why I was incredibly optimistic about both sister companies.

First of all, it’s important to note that both companies — and therefore, both stocks — more or less move together due to any privatization affecting both or none of them.

During that last piece of research on Freddie Mac, I described how Ackman believes the stocks could reach the $31-$34 range each if they are privatized. Given this would obviously apply to both companies, it would mean a major jump in shares, given that at the time of this writing, shares are worth $6.72 ((OTCQB:FNMA)) and $6.12 (OTCQB:FMCC) respectively.

As of right now, a month after my last writing, the story is similar, but we’ve gathered key from the Trump administration on where things could head.

With this, my point here is to show the reasonable bull case with the risks of the senior preferred shares and the desire from Treasury Secretary Bessent to keep mortgage rates low.

Where Do We Stand?

One of the biggest things that has happened in the effort to get Fannie Mae privatized is Housing Urban Secretary (HUD) Scott Turner’s push. Turner, a former NFL player, was confirmed on February 5th by the U.S. Senate to be the new head of the Department of Urban Housing and Development.

Turner announced last Thursday, February 6th, just one day after taking over his new role, that he will “quarterback” the efforts in getting Fannie Mae privatized and out of the control of the U.S. Government. During the 2008 recession, the U.S. Government took control of Fannie Mae and Freddie Mac as the two companies were struggling with bad mortgage debt.

In a recent interview, Turner touched on the push to privatize Fannie Mae, exclaiming that “there are partners that will be at the table and obviously we’ll be one of them,” when it comes to releasing Fannie Mae from the Government’s control.

The fact that Turner made this announcement the day after assuming his new role shows me that this is something he is very serious about and plans to attack quickly. This is encouraging to me.

He will need to get other stakeholders on board. So far there looks like there’s interest.

Treasury Secretary Scott Bessent offered his thoughts on the plan to privatize the two companies and get them out of control of the Government. According to Bessent, any release of Fannie Mae and Freddie Mac from their current conservatorship would depend on the implications for mortgage rates.

Right now, the priority is tax policy — once we get through that, we will think about [reforms to Fannie and Freddie], Bessent said after an interview with Bloomberg’s Saleha Mohsin on Thursday, February 6.

Bessent added: Anything that is done around a safe and sound release is going to hinge on the effect of long-term mortgage rates.

It’s clear that keeping mortgage rates low is one of the biggest things stopping the two companies from being privatized almost immediately. However, it’s a bit of a catch-22, because Fannie Mae and Freddie Mac help keep mortgage rates low.

According to JVM Lending, mortgage rates are much lower under Fannie Mae and Freddie Mac because “the government guarantees every loan underwritten to their standards.” In this case, both Fannie and Freddie’s borrowing costs are low because their cost of funds are low because the government backstops their borrowing efforts.

Fannie’s rates are particularly low for first-time homebuyers with small down payments (under 10%). Without Fannie and Freddie, many of those buyers would have trouble getting financing at all, JVM Lending claims.

Adding to the mortgage rate risk (which has to be answered before a privatization), there is a risk of excess dilution for common shareholders, due to a 4% capital requirement. Ackman claims this bar is too high, according to his presentation.

The current 4% capital requirement is too high and would increase the cost of mortgage financing at a time when home affordability is at record lows and mortgage rates are at multiyear highs… 4% capital would require ~$270 billion to support the single-family guarantee business alone, >2x the capital held by both entities today. This would tie up ~$100bn+ of wasted capital that could be better deployed in other US businesses.

To address this (and the over dilution issue for shareholders), Ackman believes a 2.5% equity capital requirement could allow the mortgage buyer to still charge a guarantee fee and still produce enough net income to justify its capital ratios. This could mean we can keep guarantee fees at the levels roughly where they are today.

To help keep the cost of funds low for Fannie (and Freddie) the government should forgive its senior preferred shares like Ackman suggested. The US government has made far more than its principal amount back. Dropping these shares would save billions of dollars annually in interest.

Valuation

As I mentioned earlier in this article and in my previous research, Ackman believes that shares could be worth anywhere from $31 to $34 a piece if Fannie Mae and Freddie Mac are released from the control of the Government. However, this will only be attainable if we see an IPO (Initial Public Offering) or a release from the Government into two private entities.

Because of this, I think we (like with Freddie) still need to figure out what the blended valuation of shares is (equal weighted chance we IPO and equal chance the IPO doesn’t go through). I believe that there is definitely a non-zero chance that this happens. I think this will give us a middle of the road scenario of what shares are worth.

As I wrote about last time, shares of Fannie Mae (like Freddie) are worth, essentially, nothing if the company is unable to separate into a private entity due to the Senior Preferred debt. However, I think this is unlikely to happen. I think the eventual outcome of what will happen is closer to Ackman’s belief of $31 to $34 per share, but it’s important to recognize that this outcome is a possibility.

In the bull case, I agree with Ackman’s opinion that shares will be worth roughly $31 to $34 if they can separate from the conservatorship and spin out in a capital efficient manner. I arrive at Ackman’s valuation based on the company trading at 10 times its last 12 months net income.

In 2023 (last full year of earnings) Fannie Mae brought in a net income of about $17.5 billion. If we multiply this number by 10, we arrive at a market cap of about $175 billion. Based on information provided and explained later in this article, the U.S. Government will own 79.9% of shares due to outstanding warrants.

This means that the Non-U.S. Government market cap is roughly $36.75 billion. With 1.158 billion shares currently outstanding, we arrive at value of roughly $31 per share. I think my conservative P/E multiple of 10 should account for the fact that the real forward P/E multiple will probably be closer to 14 (but also offset by the fact shareholders will be diluted in an IPO).

So because of this, I still agree with my opinion from my last article on Freddie Mac that to take the middle of the road approach, shares should trade at the sector median forward price-to-sales ratio to reflect both the bearish possibility that shares are worth nothing and the bullish outcome, in which shares are worth more than $30.

Currently, Fannie Mae’s forward price-to-sales ratio is 1.35, which is 53.54% lower than the sector median of 2.91. Seeking Alpha Quant gives Fannie Mae a grade of an A- on this metric. But like I mentioned in my last article, I think there is a lot of room for upside in shares if we saw them converge at the sector median of 2.91.

If we saw shares converge on this forward Price/sales ratio, this would represent about 115.5% upside from here.

I still agree with my previous thesis on its sister firm that shares should be priced more toward the bullish side than the bearish side. There has been a strong push from many inside the administration to get this deal done. I think they know (like many shareholders do) that the market will only accept a private Fannie Mae in the event that Senior Preferred debt is wiped off the balance sheet (otherwise the risk of dilution would be huge).

Risks

I think the big risk here is that mortgage rates do not go down in a simulated privatization, which is a big key in getting Fannie Mae and Freddie Mac privatized, as I mentioned earlier with Bessent’s quote.

To counter this, there is a bull case, and that is to simply wait.

It sounds odd, but the Treasury has a series of warrants that “give Treasury the right, though not the obligation, to buy common stock in the GSEs for a nominal price in the future.” These warrants expire on September 7, 2028.

According to this document from the Congressional Budget Office:

...if the Treasury exercised all of its warrants, it would own 79.9 percent of the GSEs’ common shares issued before the new stock offering. As a result, the Treasury would be in line to receive 79.9 percent of the equity value available to existing holders of common shares after the GSEs made up their capital shortfall and redeemed their senior and junior preferred shares.

If this September 7, 2028, deadline passes, the warrants will expire, which means a spinout would be a lot more feasible with far less dilution. While common shareholders (myself included) definitely don’t want to wait, this provides a scenario where the government could convert its senior preferred shares to common stock, while not diluting shares so much that the investment becomes unattractive. Given a late 2028 timeline, however, if the warrants expire a privatization would likely need to occur in the next presidential administration (post Trump). There is no guarantee they would support this.
Bottom Line

Fannie Mae shares are at a critical juncture. With shares seeing more than a 500% increase in the last six months, I think optimism is rising that Fannie Mae will be able to privatize and break out of their conservatorship.

This is a big opportunity, but I think the real risk now is not that Fannie Mae and its supporters don’t pursue privatization, but what cost comes with it. How we can get mortgage rates lower is key.

With this, I remain optimistic on Fannie Mae, and I continue to believe shares are a strong buy.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange.
Please be aware of the risks associated with these stocks.

Well said.

$Bazinga ! Despite a Global Pandemic & current High Interest environment

Fannie & Freddie "were" & "are" BIGLY PROFITABLE !

Bingo ! Fannie & Freddie are Essential to mortgage mkt ! -

"This process keeps the housing mkt stable by

making sure there's always money available for people

looking to purchase a home. Without them, getting a mortgage

would be harder & WAY MORE EXPENSIVE."

Key Takeaways

--- Fannie Mae and Freddie Mac help keep the mortgage market stable by buying home loans,
selling mortgage-backed securities and establishing lending guidelines.

--- The Trump administration wants to turn these entities private, claiming it would shift financial risk away from taxpayers.

--- Because privatization is complex and uncertain, home buyers should not base housing purchases on speculation about industry changes.

https://money.usnews.com/loans/mortgages/articles/mortgages-under-trump-what-happens-if-he-privatizes-fannie-mae-and-freddie-mac

You guys aren't being fair to the SOB. As FNMA price has been increasing, his gang has been abandoning him. What can he do besides cloning himself?

When Pulte get confirmed, and DOGE get's
a close look at FNMA----EVERYTHING WILL BE EXPOSED, and it'll be HUGE!!

Out of the 1.1 billion shares (did I get it correct?). I can easily see 400-500M locked and in the vault, between Ackman, capital America, other silent hedges, institutions who are Hiding under the "don't need to report otc on 13f clause" and of course us retail who have a good chunk. But we are not that much. If I count the Mr. Michael, Mr. Navys of our world, we may maximum have locked up 10-15Million shares.

Anyways, coming to the point, the daily volume is pretty much circulating the day traders stocks, naked buys, shorts and so forth.. once some big news hits, there is going to be a mad scramble but no one is going to open their lot for sale and it's gonna be fun Bid vs Ask those days. I would suggest the resident troll to definitely get L2 for that week as it will be worth it to see the stomach fire...   Which is also the reason why there is a fear mongered on this board about dilution to oblivion, to gather as many shares for the naked buys (MM) to naked sells to cover..

Be wise and don't be foolish to time the sell. Don't assume that it will go down and I can increase my shares with a little play. We don't know when it will be the last wave to ride down and up. We see one long time long now enviously bad mouthing the stock as he missed the timing bus and now repenting it..

US News piece on Fannie Freddie mostly a hit piece except for a quote at the end - https://money.usnews.com/loans/mortgages/articles/mortgages-under-trump-what-happens-if-he-privatizes-fannie-mae-and-freddie-mac
Quote -
Privatization could trigger increased innovation and greater market participation, resulting in more competitive mortgage pricing, says Ralph DiBugnara, founder of Home Qualified, a digital resource for real estate buyers and sellers.

"They may be able to create more products with larger reach to more customers," he says. Without federal restrictions, DiBugnarra says, Fannie and Freddie "will have more freedom to go outside of the box."

The end to the conservatorship is so near..  only thing that needs the fogginess to be removed is, what kind of liftoff, we get(i.e. Those of us who are patiently waiting from 2012 onwards from the 25 cent days..)/. Lowest was .09 cents though not sure who bought at that price as it was for sub minutes...  

son of kthomb19

Got it, Thanks
President's Day
OK

when Thompson has so many voices in her head, they each pop out with new skits to influence others and satisfy the minds within, its self therapy.

The fakes are everywhere, and now somehow they are asking each other to predict Lamberts timing? KYCarneyClowns spawns just cant stop trying to create a new GSE world for us.
How many IDs does one person have

Market is closed Monday, 2/17/25

we might not have an especially jaw-dropping news
story in time for Monday's open

Once a new FHFA head is installed, DOGE will start the digging. They will not go near FHFA until then. Just like HUD, Defense, cFPB. They will wait for their man to give *.* Access to DoGE boyz

LOL. He is back

Click on his/her name and look at the first word in all of his/her posts ..

stockprofitter, Neither the Charter Act nor did HERA authorize the Treasury to charge a commitment fee on a line of credit to be paid by the Enterprise. I have no documentation with the statement FHFA will not allow the Treasury to steal from the shareholders. On the updated calculation you are asking for will gladly do when time permits. Best Regards

kthomp19,
As you say, have to primarily think of probabilities, not possibilities.
IF F&F drags out for a myriad of reasons, could you see the possibility that FNMAS gets called this December 31st? It is an exceedingly Long 5 year wait after that, other than for FNMAS holders to extract a better conversion rate, etc. For this reason, I could envision with a high probability of (just/only) FNMAS being called. Your thoughts?
Second, what is the chance that DOGE finds something that say directly shows the Obama Admin directly went around Congress to fund Obamacare & that was by looting the GSEs? We know that Trump is into the moral aspect of things, especially perceived incorrect judicial judgments/rulings. If DOGE finds something completely unexpected & the lid really blows on this, outside of the Courts, could Trump order something compensation-wise (&/or his team to present/justify to Congress) for JPS holders to 'make up' for the nefarious and illegal nature stemming from the USG's actions? Obviously, a Possibility, not a Probability.
Third, what do you envision being the 'final disposition'/result from Lamberth's Court for shareholders, as you well know an 8-0 D.C. jury decision?
TIA

Although we might not have an especially jaw-dropping news
story in time for Monday's open that will take us to regions
requiring high-altitude gear for trading, there should be
enough less-than-jaw-dropping good news items to make
up for it

Also Fannie has
gone 29 Days above $4.00

2/14
FNMA CLOSE $7.09
---------LOW $6.72 UP FROM LOW 37 CENTS
--------HIGH $7.10 DOWN FROM HIGH 1 CENT
FMCC - CLOSE $6.44
-----------LOW $6.14 UP FROM LOW 30 CENTS
-----------HIGH $6.50 DOWN FROM HIGH 6 CENTS

A-W-A-N-A

Ashamed to say it? That’s ok sweet ❤️, Happy valentines. We love you no matter what you are.

He should have invested half the money in the safffest dividend paying mutual funds and the rest in apartments. Then with the monthly rents from apartments and dividend paying funds he could have gambled that on the trump coin. That way he would have only lost the dividends of a month or two and learned a good lesson.

Same as you
but don't tell me

Now Samantha
That's not a very lady-like
way for a lady to talk

A weird ass for sure !

I agree that Trump can buy shares himself but he is still a businessman. I know Ackman has to be careful on the bribes. Greed is good as long as its ethical. I feel there is also good ethical and moral bribes. Bribing trump to release Fannie and Freee-die is a good moral bribe as we all know many senior citizens and veterans have invested in these two American companies. Sadly many died during these past 15 years.

Many veterans and senior citizens could really use the money to pay for there care and medical bills.

Greed is good and yes some bribes are good.

Yes I also agree with you that buying the trump coin is a good way of giving someone a valentines gift. It's also a good moral ethical bribe.

I don't know about buying the Melania coin. He might not like the idea of someone buying his wives coin.

All I have to say is ....

Jesus Christ ... Ackman give trump his box of chocolates !!!

What are you?

He/she can still buy now, plenty of room to run.. no need to cheer for lower SP

You say, "Jesus Christ," so much
I bet you're a Christian

We finally got a breakout over the rim!! Next week could be fun with the continuation!!!

Since the Republicans announce a federal secrets declassification task force.... Maybe they can look into the 11,000 documents, and the loan shark behavior of the federal government?

I am WhaleBalls.

Also please attach your document to show why there will be no conversion of any kind

Rodney can you please update after today’s earnings!
Thanks in advance.

Bumped up the numbers FYI

Mortgage giants' combined net worth hits $154.3 billion

Don Layton stated a few years ago that $135 billion should be plenty.
What are we waiting for?
No SPO required.

Correction; Only 29 Days Above $4.00.

Same for FMCC.

Just counting days with my fingers from the chart.

https://stockcharts.com/h-sc/ui?s=fnma

https://stockcharts.com/h-sc/ui?s=fmcc



In at $1.17 average price for the Twins.
😎
Cash per share;
+$60



Ron

Now do cash per share!

This guy should have bought FNMA :)