Ferrari Mailing List: Re: OT - NFC - Investment Info

[LarryT (l02turner]

Thanks John and others,
I now understand there's little value in Fannie Mae pr Freddie Mac but I wonder 
what happens to all the notes they control (or used to??).  I assume they won't 
be forgiven & will still be paid back - doesn't that alone provide some 
monetary value?  Isn't that an equity position?  Not questioning your analysis 
of the companies just trying to understand the ramifications of the loans

Seems that if I owned a few hundred billion $$ in home loans, I'd be a pretty 
popular guy.  Or am I turning things into something they aren't?

Thanks again -- 

Take Care,
Larry T  
 http://youroil.net
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http://members.rennlist.org/webercarbs/
  ----- Original Message ----- 
  From: JAshburne [at] aol.com 
  To: l02turner [at] comcast.net 
  Cc: ferrari [at] ferrarilist.com 
  Sent: Wednesday, September 10, 2008 7:06 PM
  Subject: Re: [Ferrari] OT - NFC - Investment Info


  Larry

  Avoid the equity like the plague!  It has been toast for a long time and 
especially so now that the Feds have had to take over.  It could be one of 
those dollar and a dream lottery type options, but it is a real long shot that 
the equity will ever be worth anything.

  The real play was buying their bonds before the takeover.  Even though they 
were thought to have an implicit government guarantee, their was enough risk 
and uncertainty that they were trading something like 230 basis points (2.30%) 
over the equivalent Treasury note.  When the feds stepped in, the spreads 
immediately tightened to 175 basis points, which means that the price of the 
notes shot up big time.

  There probably is still more pain to come in the financials, so I would be 
cautious in that sector.

  Just MHO

  John


  In a message dated 9/10/2008 9:59:56 A.M. Eastern Daylight Time, l02turner 
[at] comcast.net writes:
    Hey Gang,
    Gotta question and don't know who to ask.  As most people know, Fannie Mae 
and Freddie Mac,have lost most of their value.  Both are selling for between $1 
and $1.20 and with the Gov't's track record of bailing out losers, I was 
thinking of buying a few hundred shares perhaps - what do ya'll think?

    Or is there someone you could suggest I speak with?
    ;-)

    Thanks!

    Take Care,
    Larry T
    http://youroil.net
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