Frannie price targets boosted at KBW


Fannie Mae (FNMA -15.7%) and Freddie Mac (FMCC -15.5%) get just a little sell-side love, with KBW's Bose George boosting his price targets on both to $2 from $0, though he keeps an Underperform rating on the duo.

The PT change "incorporate(s) the possibility of a combination of a legal victory for shareholders combined with a lack of action on both the regulatory and legislative fronts that hurts the value of the GSEs," says George, who may be the only sell-sider still covering the GSEs after they were put into conservatorship in 2008.

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Comments (13)
  • David Sims
    , contributor
    Comments (785) | Send Message
     
    If Bose believes the common are worth $2, he must believe the preferred are worth something more than that too. I can only assume RV.
    18 Mar 2014, 01:24 PM Reply Like
  • MatchlessGlory
    , contributor
    Comments (37) | Send Message
     
    Considering he originally had it valued at $0 but has raised it to $2 isn't a bad thing. It's a sign that he is acknowledging the stock does have value that he previously did not acknowledge. He simply disagrees with the possibility that the stock will be worth the risk of investment unless the price drops below $2.00

     

    I fully disagree with this mentality. Either you think the legal victories are likely for investors and the price is worth far more than $2.00 or you believe it's "dead money" and effectively worth $0. I think putting a $2.00 price on the stock is arbitrary.

     

    Regardless this tells me that he is uncertain of success but is starting to lean more towards the possibility the investment might be profitable.
    18 Mar 2014, 02:03 PM Reply Like
  • ClairePaula
    , contributor
    Comments (4) | Send Message
     
    I agree fully with MatchlessGlory. Long Freddie en Fannie.
    18 Mar 2014, 02:23 PM Reply Like
  • tapmxt1
    , contributor
    Comments (2) | Send Message
     
    Why from $0 to (just) $2?

     

    If government wins and we get nothing, it is $0. If we (investors) win, I believe it is way more than $10 (actually I want to say $15+).

     

    So suspicious! It looks like... someone might have shorted it recently and simply tried to knock the price down to $2 in order to cover....
    18 Mar 2014, 03:52 PM Reply Like
  • cchilder
    , contributor
    Comments (13) | Send Message
     
    The dilusion that legislation will be passed this year is ludicrous! Not withstanding the lawsuits, it's an election year. Stay long my friends!!!
    18 Mar 2014, 05:26 PM Reply Like
  • divStrong
    , contributor
    Comments (166) | Send Message
     
    Maybe my calculator is acting up, but doing some simple math on current shareholders equity (9.54B) / outstanding shares (1.16B) get to $8.22/share - am I missing something here?

     

    Setting aside the idea of a 'wind down' (which I find to be extremely unlikely) if you believe these institutions will be 'made whole again' as Bernanke stated publicly and the annual $50B+ nut is returned to shareholders are looking at a price of $43.10 which seems conservative as it ignores the $5T in mortgage assets & forward earnings.

     

    The decade prior to the crash saw steady pricing in the $40s, so this seems to align well with the FY2013 balance sheet coupled with current stability in the housing market.
    18 Mar 2014, 06:20 PM Reply Like
  • Blitztour
    , contributor
    Comments (61) | Send Message
     
    Whelp, anyone who's read my prior comments, know how i feel about this.

     

    I gotta admit though, I didn't see this coming.

     

    Never thought F&F would close below $3.50 ever again. And with several analysts saying this bill looks “reasonable” and “doable” and Jerry Howard, ceo of the National Association of Home Builders calling it ‘balanced” It’s no wonder everyone got spooked. But this fear is unfounded.

     

    Fact is, there is no private equity that’s gonna take a 10% hit before the Fed kicks in. There is no way to dismantle these two without killing the economy, there is no way this bill will pass, there is no political will to take it on before midterm elections and every reform this bill suggests, could easily be applied to F&F. They could be left intact and given back to the public!

     

    Fannie and Freddie did not cause the meltdown! They were complicit but nowhere near the involvement of the banks and private equity firms. Are we dismantling them?

     

    But it appears that allot of investors have little or no faith in the 5th amendment and I'm thinking between now and the 20th, we're gonna see this go below $2 before the frenzy starts again.

     

    I’m banking that the courts will do the right thing, uphold the shareholders rights and I'll be looking forward to the next buying opportunity.

     

    But either way, this is the best ride I've had since I started handling my own investments! : )
    18 Mar 2014, 06:24 PM Reply Like
  • MatchlessGlory
    , contributor
    Comments (37) | Send Message
     
    Just buy on the dips
    18 Mar 2014, 07:08 PM Reply Like
  • Blitztour
    , contributor
    Comments (61) | Send Message
     
    Absolutly! ; )
    19 Mar 2014, 01:38 PM Reply Like
  • 513
    , contributor
    Comments (16) | Send Message
     
    This whole thing really stinks. Fannie & Freddy are bringing trillions dollars a year. They are bringing in billions of dollars per month on a global scale. Fannie is all over the planet with virtually no competition. Can any one explain to me why the treasury is able to decide after they got all of their money back, every penny plus a 10% dividend, decide to screw all of the investors and just say you dont get to decide. They will destroy the housing market making. it will virtually be impossible for the average person to qualify even for a house in the ghetto's of the world. Home and land ownership will be a thing of the past only reserved for the slum lords of the world
    18 Mar 2014, 07:08 PM Reply Like
  • calikym
    , contributor
    Comments (257) | Send Message
     
    Ralph Nader owns 75K each FNMA and FMCC common shares. His comments on CNBC http://cnb.cx/1ifCcAW. $2/share is less than companies like VTSS... That's an insult to all of the investors, attorneys, fund managers, consumer advocates and retail investors that know Fannie and Freddie are stabilizers/pillars of the US housing market and are worth at least as much as any of the big banks. I recommend that peeps read 2 articles written in past couple of days - 1 in the WSJ on 3/14 and the other called Fannie Mae, Freddie Mac will be set free by Value Walk. LONG FNMA and FMCC. Quit panicking. Use your noggins.
    18 Mar 2014, 07:46 PM Reply Like
  • calikym
    , contributor
    Comments (257) | Send Message
     
    Also Treasury owns 80% - would the government agree to any legislation that made the company shares worthless? Long FNMA and FMMA.
    19 Mar 2014, 01:29 PM Reply Like
  • calikym
    , contributor
    Comments (257) | Send Message
     
    correction: FMCC not fmma (although medical marijuana is A-OK with me - peace out) LOL gotta love autocorrect
    19 Mar 2014, 02:28 PM Reply Like
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