The story is so obvious, so simple, so overwhelmingly bullish and yet not one article or person is talking about it on this board...
All longs need to know is this. FNMA is a quasi-US government organization, it is not some near bankrupt small beverage company. What does that really mean? Well, consider the fact that the United States is a country with its financial house in extreme disorder, dependent on foreign nations willingness to buy its bonds in order to stay financially solvent. The only reason these nations aren't demanding much higher yields is because of the historical good standing name of our country. Now here is the kicker. Do you people really believe that US government will "wind down" or "dissolve" one of its own institutions without compensating its shareholders? There are $3 billion in common shares outstanding, and FNMA is earning billions. The global shockwave that would hit the financial system should any word get out that the US govt "cheated" shareholders of one of their institutions would create massive panic selling in the US bond market.
My point of saying all of this is to simply remind you that psychology is everything in these matters and there is ZERO chance that US government will risk its good name to wipe out a measly $3 billion dollars in common stock without fully compensating shareholders. Makes sense?
[Yahoo Finance Board]
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