I agree - I'd be surprised if the bailout wasn't finalised before Monday morning. I think 2 cents is too generous for shareholders - zero is all they should get.
If you can figure out what is going to happen you can make a killing. I think its likely the stock will go down but if it doesnt the squeeze will be huge, so I'm not sure if I add at this levels
Well the $3 FRE puts and the $2.50 FNM puts still provide an opportunity to make money on a stock price below $2
My gut feeling is that this will not be the case but rather the common share holders while losing a good bit if they bought and held, will, in the end, be at least partially bailed out by US tax payers. Frankly I take no stock in Barron's prognostications whatsoever, as of late it seems they have been used to manipulate and have little credibility in my mind. (Consider, as just one example, their truly idiotic, recent, front-page call on GM.) Think about the mutual funds and institutions that own fanny and freddy and i think it will be clear that these guys will be rescued in some form or other at, of course, the tax payers expense. All Treasury has to do is let the word on the action to be taken "leak" to favored funds and institutions ahead of the public, and they can position themselves appropriately to take advantage. I just don't see current equity being permanently wiped out as Barron's has predicted "may" happen. But, to be sure, it is a bad situation no matter what, and underscores the ultimate depth of the recession we are entering. It will be quite a few years before the real estate/banking/building sectors recover! (Thank you Mr. Greenspan!)
I understand your point, however I think there have been sufficient leaks this week to give professional money managers time to dump the stocks. Also, I don't think that Paulson can "sell" the idea that taxpayers should bailout shareholders.
There is no systemic risk to wiping out shareholders, and its virtually all upside since it decreses the amount of taxpayer money involved. dont a lot of ETs cry about the fed sticking to its mandate of full employment and all the easing it leads to?Well, expect paulson to try to save as much as money as possible, he knows its his duty
Interesting piece about the bagholders of preferred stock in FRE and FNM: http://money.cnn.com/2008/08/20/news/fannie.freddie.fortune/index.htm?source=yahoo_quote Publicly listed holders of the preferred include: WL, HIG, ALL and GNW
spreads are blowing out even AAAs (whatever AAA means) click on the top of the list http://www.markit.com/information/products/category/indices/cmbx.html