Fannie Mae (FNM) Down 14%, Below $10 Again
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Fannie Mae (NYSE: FNM) is expected to post financial results tomorrow and traders are sending the stock down 14% today, below $10 per share. On average, analysts are looking for Fannie to post a loss of $0.69 per share, but many expect it will be much larger. Fellow GSE, Freddie Mac (NYSE: FRE) reported on Wednesday and the loss was 3x the estimate. Fannie Mae will likely post large additional write-downs on its mortgage portfolio and increased loss provision.
As nationalization talk surrounds the name, it seems that the stock is trading only as a call that the US government doesn't have to take it over. When the company needs to raise capital, who will be there to give it? That is the question traders are asking. If it is only the US government, then the bail-out plan will have to be implemented. Will current equity holders get whipped out? Likely.
As nationalization talk surrounds the name, it seems that the stock is trading only as a call that the US government doesn't have to take it over. When the company needs to raise capital, who will be there to give it? That is the question traders are asking. If it is only the US government, then the bail-out plan will have to be implemented. Will current equity holders get whipped out? Likely.
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