Bove Sees Hope In Last Week’s Fannie Mae Settlement

ValueWalk - October 28, 2014 - October 28, 2014

ValueWalk, By Michael Ide

Shares of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) had a small rally Monday morning following Friday’s surprise settlement with pre-2008 shareholders who had accused the agency of fraud for misrepresenting its finances. Even though this settlement explicitly relates to pre-conservatorship shareholders, Rafferty Capital Markets VP of equity research Richard Bove sees a connection with other cases winding their way through the courts.

“Fannie Mae’s conservator is implicitly arguing in a number of other lawsuits that the government took over a bankrupt company in 2008 and, therefore, would have no obligation to make payments to any groups of plaintiffs,” Bove writes. “If the company was not bankrupt and it was slated for a return to publically held status; then the company would have an obligation to pay the claimants in other lawsuits.”

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