But with the profitable Fannie May having $3.2 trillion in total assets, while it profitable sister firm Freddie has $2.0 trillion in assets, junior preferred shareholders -- and obviously common shareholders -- see plenty of wealth to go around.
GSE junior preferred shares also popped on Friday. Here are our usual two examples:
Fannie's preferred series E shares, with a coupon of 5.10% and a par value of $50.00, closed at $14.00 Friday, rising 59% for the day. The shares trade under the ticker FNMFM and have risen 775% from $1.60 at the end of 2012
Freddie's preferred series Z shares, with a coupon of 5.375% and a par value of $25.00, closed at $6.49 Friday, rising 11% for the session. The shares trade under the ticker FMCKJ and have risen 271% from $1.75 at the end of last year.There's no telling what presumably ridiculous way forward the Obama administration and Congress may plot for the GSEs, but their junior preferred and common shareholders could be gearing up for a nasty fight. And with the earnings continuing to flow, the junior preferred dividends could be restored. Fannie's preferred series E shares are supposed to pay annual dividends of $2.25 a share. If the dividend were restored, an investor who went in at Friday's close would see a dividend yield of 16.07%. Freddie's preferred series Z shares are supposed to pay annual dividends of $1.34 a share. If the dividend were restored, an investor who purchased the preferred Z shares at Friday's close would see a dividend yield of 20.65%. Of course, if the junior preferred dividends were to be restored, the shares would likely bounce right up to par, leaving investors free to book massive profits, or reap very high dividends, assuming they went in at deep discounts.
-- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV