Freddie (FRE) & Fannie (FNM) 01 (May 08 - Feb 12)

[millionairemind]

Fannie closed at around $7 last Friday.

I was watching CNBC just now and the pre-open bid/ask for Fannie is $1.70???

Massive destruction in shareholder value.

[millionairemind]

Some interesting stats I just read on the web about the F&F.

Fannie Mae

Established:1938
Privatised: 1968
Mortgages owned: $750bn (June 2008)
Mortgages guaranteed: $2.6 trillion (June 2008)
Financed homes for more than 55m US families in its lifetime
Freddie Mac

Established:1970
Mortgages owned: $792bn (June 2008)
Mortgages guaranteed:$1.4 trillion (June 2008)
Financed homes for more than 50m US families in its lifetime

[kennynah]

Fannie closed at around $7 last Friday.

I was watching CNBC just now and the pre-open bid/ask for Fannie is $1.70???

Massive destruction in shareholder value.

time to buy it....this is not to say, one cannot lose $1.70...it just means, the risk is a total of $1.70 vs the upside potential in the long run... in this life time, we may not get another of this subprime problem that will take fannie down to such low prices again..

this is not bottom fishing and i am not saying this $1.70 has no downside...i am only saying, i am comfortable with assuming this risk of losing $1.70...

it is not likely go to $0 value since the treasury has openly declared it's support to ensure fannie and freddie stay in business.

[chaibu]

Fannie closed at around $7 last Friday.

I was watching CNBC just now and the pre-open bid/ask for Fannie is $1.70???

Massive destruction in shareholder value.

time to buy it....this is not to say, one cannot lose $1.70...it just means, the risk is a total of $1.70 vs the upside potential in the long run... in this life time, we may not get another of this subprime problem that will take fannie down to such low prices again..

this is not bottom fishing and i am not saying this $1.70 has no downside...i am only saying, i am comfortable with assuming this risk of losing $1.70...

it is not likely go to $0 value since the treasury has openly declared it's support to ensure fannie and freddie stay in business.

K: You are sharp! Call it whatever you like. It's a bet. And at good odds too...... given a long time frame. If I am into US stocks I would certainly take a bet at this price.

[kennynah]

chaibu : haha...yes, it is a bet, simple as that...no big time arguments on why even take a Long...

wow....fmn...1.15 now

exactly the same feel when WaMu was $3....then 2 days later...peo to $6...

[Cherry]

Hi Kenny

Please see PM.

[kennynah]

thanks cherry very much....read your PM and noted...i do encourage you to post this article... no problem with an opposing view...it's healthy...

ps : i responded to you but the outbox very cockup one...at this hour, duno why, my response always get stuck at the outbox and wont get fired out... but i noted your article...many thanks again for your kindness...

[Cherry]

kennynah wrote:

i do encourage you to post this article... no problem with an opposing view...it's healthy...

With Ken's encouragement, the abridged article is as follows:

One may need to evaluate if the shares to be issued to the US government will be senior to not only existing ordinary shares but also the existing preference shares as well, in which case, the existing shareholders do not get to benefit from the huge bailout at taxpayers' expense.

It is estimated that the entire bailout could cost the US govt something like US$200 billion. If one intends to buy into Fannie and Freddie, one needs to evaluate if these two stocks will be delisted from the New York Stock Exchange and eventually, probably some years later, the shares of the US govt would be sold to the public via an IPO.

[kennynah]

thanks cherry.... we all need to perform due diligence and to highlight an article you read is sufficient for many...of cos, if the source can be cited, even better...but no obligation on your part...thanks again...

[millionairemind]

How to BUY FRIENDS AND INFLUENCE PPE..

Fannie & Freddie: Buying friends in D.C.
The two mortgage finance companies doled out $174-million over the past 10 years to Washington lobbyists, report says.

NEW YORK (CNN) -- When it came to buying influence in Washington, Freddie Mac and Fannie Mae were among Corporate America's biggest spenders.

The two mortgage giants paid $174 million to lobbyists over the past ten years to ensure the political climate would remain friendly to growing the mortgage business - even as the housing bubble began showing signs of bursting, according to a report by the Center for Responsive Politics, a watchdog group.

"They tied up almost every lobbying firm in Washington, whether they used them or not, over the past several years," said Joshua Rosner, a financial analyst with Graham Fisher & Co. and long-time critic of both companies.

Freddie Mac (FRE, Fortune 500) spent over $94.8-million on lobbyists since 1998, making it the nation's 12th-largest lobbying client, while Fannie Mae (FNM, Fortune 500) bought $79.5-million of influence, the 20th biggest spender, according to the Center for Responsive Politics.

"They wanted to fend off regulation of their enterprises," said Massie Ritsch of the Center.

Until recent months, Fannie Mae and Freddie Mac largely succeeded in that effort - functioning with relatively little oversight as they aggressively grew their portfolio of mortgages to try to increase earnings.

Campaign contributions bought influence as well, including donations to the presidential candidates.

Sen. Barack Obama is the No. 3 recipient of Fannie and Freddie campaign dollars, having collected $123,000 from the companies since he first ran for the Senate in 2004, according to the Federal Election Commission and the Center for Responsive Politics.

The former chief executive of Fannie Mae, James Johnson, was the original head of Obama's vice presidential search team. Johnson resigned from Obama's campaign amid controversy over discounted home loans he had received.

Sen. John McCain has received $19,000 from the two companies in the past ten years.

His campaign manager, Rick Davis, formerly led the Homeownership Alliance, an advocacy group for Fannie Mae and Freddie Mac's mortgage businesses.

"We had the Keating Five," said Rosner, referring to McCain and four other senators who had supported the head of the failed Lincoln Savings and Loan Association nearly 20 years ago.

"This is closer to the Keating 535," added Rosner referring to all members of Congress. "Those legislators who have cost shareholders, preferred shareholders and taxpayers potentially hundreds of billions of dollars, I think we ought to hold them accountable."

Regulators, in taking over Fannie Mae and Freddie Mac, are suspending the companies' efforts to buy influence.

"All political activities, including all lobbying, will be halted immediately," said James Lockhart, head of the new Federal Housing Finance Agency that will oversee the companies.

While Fannie and Freddie are now in a government conservatorship, it will remain for Congress to decide the companies' ultimate fate.

One of the few critics of Fannie and Freddie, Sen. Jim DeMint, R-S.C., called Monday for the mortgage companies to be restructured and lose their government backing.

"For years, these two mortgage giants have used taxpayer guarantees to gain enormous profits and lobby Congress to look the other way while they failed homeowners," said DeMint.

"These mortgage giants must be broken up and forced to survive in the marketplace without taxpayer guarantees," he added. "Allowing them to survive into the future with explicit government backing will only bring more harm to American homeowners and greater debt to American taxpayers."