The preferred stock of Fannie Mae and Freddie Mac is among the hotter issues of the year after...

The preferred stock of Fannie Mae and Freddie Mac is among the hotter issues of the year after doubling thanks to improved results at the firms. The question before the house is whether the government will allow the finance firms to return to private ownership without zeroing out existing investors. As for the common - FNMA.OB and FMCC.OB - "Total casino," says KBW's Bose George.

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Comments (6)
  • DeepValueLover
    , contributor
    Comments (11312) | Send Message
    The whole darn market is a casino.


    Might as well invest in highly profitable companies like Freddie Mac.
    8 Apr 2013, 08:26 AM Reply Like
  • dgfurr
    , contributor
    Comments (66) | Send Message
    It doesn't really matter how it plays out, the government took the firms without compensation to shareholders ( common holders) or creditors ( yes the purchase of a preferred share was a contract for future income for a cash investment now). This is not a permissible action according to the constitution of the United States. In addition the original preferred shares are senior to the governments common warrant. to fully control the companies, the government must exercise the warrant and if they do, it means the companies have value. It would then be hard to avoid compensating either the preferred holders in full and the common holders in part. One last point, it would also be hard for the government to avoid a comparison to AIG, which is now doing just fine. Most of the damage was done when these firms were required to write down assets that were never worthless to begin with.
    8 Apr 2013, 09:16 AM Reply Like
  • User 10586321
    , contributor
    Comment (1) | Send Message
    I think the real issue is that the government has not one clue on where to begin without Fannie/Freddie. The return is coming people.
    8 Apr 2013, 02:53 PM Reply Like
  • sa_member_756157
    , contributor
    Comments (1364) | Send Message
    Implied in the government's announcement to markets of solvency, and anticipated profitability, is the idea that shares are stable, profits may be made by those buying shares. Not a lawyer, but, that is certainly the spirit of the thing today.
    11 Apr 2013, 03:53 PM Reply Like
  • tokyojoetrader
    , contributor
    Comment (1) | Send Message
    Stock should be trading a lot higher. I think it is worth around $6 a share at the moment. They won't cancel it out, at least not for a couple years.
    29 Apr 2013, 01:32 AM Reply Like
    , contributor
    Comment (1) | Send Message
    Why does the price of FMCKJ go up slower than FNMA, FMCC and FNMFM?
    29 May 2013, 11:54 AM Reply Like
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