Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) have continued their move up the chart, despite its recent announcements of capital problems. The changes in share value for the association have introduced great uncertainty in the already fragile market. The company has already notified the Treasury that it might be in need of a bailout soon. The news should have come as an alarm to the investors, since the last time the company struck a deal with the Treasury it lost 79% of its GSE’s common stock.
The rise could indicate a time of love in the ongoing love-hate relationship between the investors and the company. When the FNMA is at its lowest, it has been known to attract investor interest, in hopes of a huge payday. The road seems to have started going towards the payday after the company had announced it would be filing to be listed on the Frankfurt stock exchange. The share is currently being traded at $2.55, a fraction of its pre-crisis value. With new plans in the pipeline, this value could surge quickly. Bill Ackman, the largest holder of FNMA stock, believes that the shares could be worth $23-$47 each if the company is allowed to build its capital and investors are allowed to share the profits.
However, the hate soon starts seeping in since the shareholders are not allowed a share in the profit. This attitude from the company has quite often made the investors lose interest, which was also the reason the company had been left for dead by market experts after the crisis. It is only fair that the investors get their hard earned profits after all they did add to the company’s value when it was on the verge of its collapse.
Additionally, if the company continues to behave as it does with the investors in the US, it would lose more than it can earn from Europe. The company seriously needs to rethink its policies and change how it deals with its investors.