detearing
5 hours ago
Current Book Value per Share (Approximate): As of Q1 2025, Fannie Mae's net worth (which is its book value) was approximately $80 billion. With 1.16 billion common shares outstanding, the book value per share is roughly $68.97 ($80 billion / 1.16 billion shares).[2]
Future Capital Accumulation: If Fannie Mae retains $12 billion in net income annually for, say, 2-3 years post-conservatorship, its book value would increase significantly.
Year 1: $80 billion + $12 billion = $92 billion
Year 2: $92 billion + $12 billion = $104 billion
Year 3: $104 billion + $12 billion = $116 billion
Future Book Value per Share (after 3 years of retention): $116 billion / 1.16 billion shares = $100 per share.
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Numerical Substantiation for a $34 Target
Shareholder Lawsuits: The ongoing shareholder lawsuits seeking compensation for the Treasury sweeps could significantly impact the valuation. A favorable resolution for shareholders, potentially leading to a settlement or a ruling that allows for greater shareholder participation in future profits, would be a strong catalyst for a higher stock price.
Legislative or Administrative Reform: A clear path to recapitalization and release from conservatorship, whether through legislative action or administrative changes by the FHFA and Treasury, would de-risk the investment and likely lead to a re-rating of the stock.
Calculation:
Conservatorship Exit & Full Capital Retention: Fannie Mae is released from conservatorship by late 2025 or early 2026, and is allowed to retain 100% of its future earnings.
Average Annual Net Income: Fannie Mae generates an average annual net income of $12 billion post-conservatorship, reflecting a stable housing market and efficient operations. (Historically, Fannie Mae has demonstrated the ability to generate significant profits. For example, in 2021, Fannie Mae reported net income of $22.1 billion, and in 2022, $12.9 billion, though 2023 saw a decrease due to market conditions).[1]
Shares Outstanding: Approximately 1.16 billion common shares outstanding (this number can fluctuate slightly due to various factors).
Target Price-to-Book (P/B) Multiple: A P/B multiple of 1.5x to 1.7x, which is a reasonable range for well-capitalized financial institutions with stable earnings.
Target Price: $100 (Future Book Value per Share) * 0.34 (Implied P/B multiple for $34 target) = $34.
Now, applying the target P/B multiple:
Current Book Value per Share (Approximate): As of Q1 2025, Fannie Mae's net worth (which is its book value) was approximately $80 billion. With 1.16 billion common shares outstanding, the book value per share is roughly $68.97 ($80 billion / 1.16 billion shares).[2]
Future Capital Accumulation: If Fannie Mae retains $12 billion in net income annually for, say, 2-3 years post-conservatorship, its book value would increase significantly.
Year 1: $80 billion + $12 billion = $92 billion
Year 2: $92 billion + $12 billion = $104 billion
Year 3: $104 billion + $12 billion = $116 billion
Future Book Value per Share (after 3 years of retention): $116 billion / 1.16 billion shares = $100 per share.
Alternative Scenario: Focus on Earnings Power and a Lower P/B Multiple
This calculation shows that for a $34 target to be substantiated, even with a significantly increased book value per share (e.g., $100), the market would still be valuing Fannie Mae at a substantial discount to its book value (0.34x P/B). This indicates that a $34 target is likely not based on a standard P/B multiple for a fully normalized financial institution, but rather on a more conservative valuation, or perhaps a "recovery value" that anticipates only partial recognition of its intrinsic value due to lingering uncertainties.
Let's re-evaluate the $34 target based on a more direct earnings power approach, assuming a lower P/B multiple is applied due to the unique nature of the entity.
Required Book Value per Share: $34 / 0.5 = $68.
If the market were to value Fannie Mae at a 0.5x P/B multiple (still a discount, but less severe than 0.34x), then for a $34 target, the book value per share would need to be:
A 0.5x P/B multiple for Fannie Mae, even post-conservatorship, could be justified by:
Why a 0.5x P/B Multiple?
This means that if Fannie Mae's book value per share remains around its current level of approximately $68.97, and the market applies a 0.5x P/B multiple, the stock price would be around $34. This scenario, where the current book value is recognized at a 0.5x multiple, is the most direct numerical path to a $34 target without requiring significant future capital accumulation beyond current levels.
Conclusion on Numerical Substantiation:
Perceived Government Control/Intervention Risk: Even if released from conservatorship, the market might still price in the risk of future government intervention or limitations on its business model.
Utility-Like Nature: Fannie Mae operates in a highly regulated, quasi-utility fashion. Utilities often trade at lower P/B multiples than growth companies.
Limited Growth Prospects: While essential, Fannie Mae's core business of guaranteeing mortgages is mature and highly dependent on the overall housing market, potentially limiting significant organic growth.
Dividend Policy Uncertainty: The market might be uncertain about future dividend policies, which impacts investor returns.
A $34 FNMA target is most directly substantiated by the market applying a price-to-book (P/B) multiple of approximately 0.5x to Fannie Mae's current book value per share of around $68.97. This implies that investors believe Fannie Mae's current net worth is undervalued by half, or that future earnings retention will be significant enough to justify this multiple on a slightly higher book value. This valuation would be contingent on a clear path out of conservatorship and the ability to operate as a self-sustaining entity, even if still under significant regulatory oversight.
wdereb79
6 hours ago
The Senator letters are extremely bullish for us. The timing is mere formality so that they can say they opposed Trump's agenda, but in truth, they can't do a damn thing. They know this of course, but they still have to do their bitching for show.
We all knew this meeting was about uplisting, but there were some that were saying this is just a standard meeting and for us not to get our hopes up. This letter puts all that to bed. Clearly, tomorrow's meeting is about uplisting the GSEs. We all put two and two together after the Trump tweets and then Pulte announcing the meeting with the SEC, Bessent, etc. But it still was not clear. We have been led to believe this meeting has happened quarterly since 2008. Obviously, that has not been the case. I believe this is a HERA violation, but I am not certain, nor do I think that matters at this point. Maybe it does though as it clearly shows a lack of duties by the government in regards to the GSEs (WOW SHOCKER LOL). Anyway, tomorrow will definitely be exciting. GLTA
Red Cloud
9 hours ago
We need to provide a letter of our own -
President Trump, Bill Pulte, Scott Turner, Scott Bessent and We the Shareholders need to draft and submit our own letter, demanding answers from Senators Warren Schumer Kim Wyden Hirono and Warnock regarding the LIES, FRAUD, CORRUPTION, WASTE AND OUTRIGHT THIEVERY of Fannie Mae and Freddie Mac - and every single time these Senators submit a letter demanding answers, or ANYTHING, they should be immediately delivered copies of OUR letter demanding answers. BE SPECIFIC regarding the instances of fraud, lies, strong arming the F'n'F Boards of Directors - the whole shooting match.
Need help drafting the letter? Plenty of people here who would love to contribute I'm sure.
And, guys - don't forget to make our letter public, send it to the NYT, WSJ, Washington Post, AP.....Fox News.....anyone who will listen.
EternalPatience
12 hours ago
Pulte's silence is primarily around the June 18th deadline, than the June 17th deadline..
I expect him to give a very vague, politically correct, run of the mill, standardized responses to their questions and start the tweet from 18th onwards...My weightage to this as the reason for the silence is 75%
There is also a 25% chance, there is some serious discussions that may happen in tomorrow's meeting, but knowing his social media presence, that would make him tease it out like crazy and milk the attention to the max.. But he may have received some advise on tips and insider trading etc.. so may be thats why he is quiet..
Lets see.. what comes out tomorrow (which may not be much) and day after..