FNMA &FMCCBILL ACKERMAN &OTHER BIG MANAGERS BOUGHT MILLIONS OF SHARES OF FNMA &FMCC COMMON.THEY ARE SAYING GOVT.TOOK OVER BOTH COMPANIES BY FORCE UNDER CONVERSHIP .AT THAT TIME COMPANY SHATE WAS A SHARE.THEY PAYING 1.50 IN DIVIDEND IN 2009.GOVT.TOOK OVER IN 2009.NOW GOVT SUED &EVERY THING IN COURT.COURT HAVE JURY TRIALTHIS WK.COMMON HOLDERS ASKING JUDGE17 I LOST DIVIDEND +STOCK VALUE=60/SHARE
BILL ACKERMAN SAID THEY WORTH 60/SHARE
I NEED OTHER PEOPLE OPINION.JURY RESULT WILL COME IN TWO WKS.
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
There have been half a dozen court decisions over this “taking” of Fannie Mae and Freddie Mac by the government, and lots of investors who believe that the company will be re-floated and re-capitalized in the public markets.
So far, they’ve all been wrong, and essentially every court decision has gone against the investors.
What’s the right answer? I don’t know. Fannie Mae and Freddie Mac were essentially given a government monopoly over underwriting and packaging mortgages for investors, and they benefitted from the implied but not legal guarantee from the government that those bonds would never lose money. They should have been either government agencies or private companies, in my opinion, not a hodgepodge of the two with no clear line of risk or responsibility, and they’ve effectively become government-owned entities now. Will the courts turn them back into private companies? Will Congress or the executive branch make any changes to the law or the treatment of these companies, either because of the courts or out of their own self interest when we need to re-capitalize the mortgage business after the next crisis? I have no idea.
It’s a bet on the courts and on future regulatory and legislative action. I can see why smart people are tempted to make that bet, like Bill Ackman with his 100% confidence that he’s always right and always the smartest guy in the room, but in my opinion the uncertainty and the politics make it not worth the brain power.
Regardless of what the courts say, what do you think will happen if it looks like a few hedge funds are going to reap windfall returns from FNMA or FMCC? We could easily have another firestorm, some executive or congressional action to thwart those hedge funds, and a whole new decade of lawsuits.