If FNM has been in business for eighty years then the average cost basis of its assets reflect mortages that were given to me to buy my $500,000 house as well as my next door neighbor Jeff that bought his house 25 years ago for $40,000.
It seems to me that 9/10's of FNM's loans have to be solid and that the sellers of the stock are in panic mode.
While I think FNM shares are cheap at $12, I would rather be a holder of LEH as I think LEH's exposure to equity trading and investment banking will offset slower growth in fixed income sales.
Full Disclosure: I bought 200 FNM on Friday at $7.49, Sold 100 at $11.50 on Friday and have a limit order to sell 100 at $16.00.
About Me
- Rich Tullo
- Richard Tullo is a securities analyst and trader with more than 20 years of experience. During the late 1990s he brought more than 40 technology companies public as a NASDAQ market maker for Hambrecht & Quist and Cowen and Co. From 2001-2004, Rich Tullo was an investment analyst for Providence Capital an activist hedge fund in New York. More recently, Rich was an analyst with Sidoti and Company a noted independent research firm and published investment reports on the Media and Telecom industry. Rich Tullo has also published numerous editorials, reports and industry white papers on infrastructure investing and exotic investment instruments