So what is FNM and FRE going to open at Monday?

Discussion in 'Stocks' started by ang_99, Sep 6, 2008.

  1. Cutten

    Cutten

    Personally I think the common is worthless. The shares won't get another dividend, and any profit the companies make will go to paying the government shares. The preferred shareholders are talking about being wiped out. That doesn't leave much for the common.

    IMO the prices today are just investors being irrational - just like the prices Friday after the announcement (people actually bid the stock up!) were irrational, just like the huge rally in late July was irrational, just like the price for the last 18 months has been irrational. Sometimes the market just gets it wrong and I think this is one of those cases.

    I've exited the bulk of my position but I am riding some down, partly just to see if I can really stay short something into single digits - cents, not dollars. I'll sit with a bid at 1 cent per share and wait to get hit.
     
    #11     Sep 8, 2008
  2. Daal

    Daal

    I dont think you will get hit. Enron stock trades a 6c. Indymac tripled over the last few weeks and stands at around 30c, this is probably one of those times where the stock never gets to intrinsic value because people decide to overpay for hope, forever
     
    #12     Sep 8, 2008
  3. You think thats the reason the stocks dont trade to zero?

    Bet it isnt
     
    #13     Sep 8, 2008
  4. way off the subject, but health south traded all the way down to .06 cents also. then back to mid $20 what a hell of a return
     
    #14     Sep 8, 2008
  5. m22au

    m22au

    When you are talking about stocks trading under $1, it's probably more useful to look at market cap rather than share price.

    Eg. SIRI at 99 cents will be a company worth more than $2.8 billion.

    IDMC / IMB was worth about $100 million at 99 cents.

    FRE has 647 million shares outstanding, and at 88 cents was worth 569 million.

    FNM - 1.07 billion shares at 73 cents, worth 780 million.

    At the start of the day, FNM was generally at higher share price than FRE.

    Then FNM underperformed as the day wore on, and the share prices began to track each other.

    Towards the end of the day FRE outperformed further, possibly due to the lower number of shares outstanding and lower market cap.

    I agree with Daal - that the stocks may take a very long time to go under 10 cents per share.

    There are quite a few people on the Yahoo Messageboards who are still buying shares in these companies, and are particularly attracted to them due to the sub $1 share price.


     
    #15     Sep 9, 2008
  6. Daal

    Daal

    It could be the opposite. in these situations psychology and hope tend to dominate so maybe the ratio of current price to the all-time high of the stock is what matters(adjusted for how good 'hope story' is). at 0.03c even I would be buying fnm, even if I'm clueless if the market cap is too high
     
    #16     Sep 9, 2008
  7. It's just Bill Miller averaging down.
     
    #17     Sep 9, 2008
  8. m22au

    m22au

    You have a good point there.

    I suppose this is what makes a market. Like yesterday when FRE went from 88 cents to above $2, to 65 cents, to $1, then down to low 80s, all in the one trading session.

    Edited to add: When will S&P pull the trigger and get rid of these "companies" from the S&P 500?


     
    #18     Sep 9, 2008