ChefJoe said: ima4ltrwrd said: njdealguy said: FNMA (Fannie Mae) closed at 1.54 up 19 cents today. Hoping for it to swing upwards of $2 soon!
What is your reasoning?
Probably "this OTC stock has gone from $0.95 to $1.54 in the past 5 trading days." Next time it goes up 60% it will be at $2.5 . Recent market darlings and unfounded exuberance (see AAPL to 1000 stories).
To be fair, FNMA is doing well paying back the federal loans and was riding pretty high not that many years ago.
I can see this being relisted into NYSE once it satisfies 30 consecutive days where its at least $1, thats a criteria in order to be allowed to reapply for it. Secondly, the reason I'm optimistic with this is Fannie Mae has just had a few profitable quarters in a row and just made a record profit this quarter.
Whats been keeping the stock so cheap is that the government had bailed it out and kept it in a conservatorship. Out of the 116 billion that it borrowed from taxpayers, only 20 billion remains to be repaid which is forcasted will be later this year. And ultimately with the rebounding housing market and profitability of this organization, it will make more sense for the government (some huge hedge funds are speculating this too and made large purchases this week, you are welcome to google the articles) to again privatize the company. If the loans were already all paid off, I've read that the current earnings per share would be around $4.50.
I can see the stock returning to the $40+ per share (based on earnings per share above and a modest PE ratio of 10) after it reprivatizes from gov't conservatorship and has all the bailout money paid off.
In the immediate moment, theres 130 million outstanding shorts where they'll have to cover soon with the share price increasing, causing a short squeeze I forsee probably this week. Also, around the close of the market today, there was a trade placed for 10MM+ shares that couldnt get fulfilled, and probably will at start tomorrow, so will see how that plays out in the share price.
Have made a wager of 15k shares that I bought last week at $1.22 per share, and am hopeful that it'll turn out to be a opportunity of the decade for me.
Lets see what it opens at tomorrow! Good luck