Fannie mae and Fre stock?

Question

Any one guess what Fannie Mae will do after all the trouble? I own Fannie Mae stock what should I do?

Answer 1

It will be one of the biggest story so far in investing if the Feds do not bail them out.

Answer 2

At what price did you buy it?

Are you happy with the dividend?

Hold on to it , if you can, I think it will go up from here. Back to last weeks price in about 3 months, back to last years price in about 4-5 years when the real estate industry has recovered.

Answer 3

I think Fannie and Freddie stocks will eventually become worthless.  Because both of these companies own a lot of bad mortgages.  And their losses will eventually exceed their total worth.  

The federal government will then take over these companies.  And they will continue to operate.  But the shareholders will be left with nothing.  

This is what normally happens when a bank becomes insolvent.  A good example of what the shareholders are left with when the government takes over is IndyMac Bancorp (IMB).

Answer 4

Hang on to it, Bush said on Friday he wants them to stay around so eventually they will be back

Answer 5

Tough to say.  I do think this week's market reaction was an over-reaction.  Fannie's largely been a consistent earner for decades.  And the federal gov't won't let Fannie Mae fail.

On the other hand:

The financials aren't horrible currently, but non-performing loans continue to increase.  They also are using a lot of leverage, so there's not a lot of margin for error.  And they're involved with 80+ off-balance-sheet entities.  Meaning they might be hiding a lot of liabilities.

Tough call IMO. .If they weather this crisis I could see the stock rebounding many times in the next 2-5 years - recovering the recent losses and maybe more.  If they don't, you'll be SOL.

I looked into FNM this weekend thinking there might be a bargain there.  I've decided it's too uncertain so I'm not buying.  However if I were already a shareholder I might be holding.

Answer 6

"Are you happy with the dividend?

Hold on to it , if you can, I think it will go up from here. Back to last weeks price in about 3 months, back to last years price in about 4-5 years when the real estate industry has recovered."

dividend??? it will be cut

so 3 months it will double, and 4-5 years it will go up 7 times?????  ARE YOU CRAZY!!!!

Answer 7

The just got got bailed out today!!! The gov won't let them fail. So if you get hurt, just cost average down. The chances of it going to zero are very slim. There should be a bear market rally for the next few weeks. If it lasts for at least a month, consider shorting the market heavily.