Bill Ackman’s план to relist Фанни Мэй и Фредди Мак faces skepticism over whether the federal government would be willing to forgive billions of dollars in senior preferred investments. Even if it did, uncertainties around capital requirements would still limit share value, according to analysts at Киф, Бруйетт и Вудс (КБВ).
“While shares are likely to re-rate up sharply if Treasury forgives the senior preferred stock, there will still be an overhang related to uncertain capital levels, which drive return on equity,” KBW analysts Bose George and Frankie Labetti wrote in a report on Tuesday.
In a live social media presentation on Tuesday, Ackman — the founder of Pershing Square Capital Management — said that a stock offering does not look “feasible.” He proposed an agreement letter between the Министерство финансов США и Федеральное агентство жилищного финансирования (ФХФА) to forgive the $193 billion drawn by the government-sponsored enterprises (GSEs).
Ackman argues the amount is smaller than the $310 billion in dividends the companies have paid since entering опека in 2008.
The letter is intended to address investors’ concerns that the Trump administration could unilaterally convert the GSEs’ senior preferred stock into common stock, massively diluting shareholders. A Дойче Банк report assigned a 20% probability to such a move.
KBW analysts agree with Ackman that such a conversion could prompt new litigation and delay the privatization process. But they are less convinced that it would affect valuations once the companies are privatized.
“We believe that many institutional investors are expecting a preferred to common conversion if there were to be a privatization,” they wrote.
In KBW’s scenario where senior preferred shares are forgiven, the analysts value the GSEs at $344 billion (assuming a 13x price/earnings multiple), below the $387 billion valuation Ackman cited in his presentation.
Ackman’s plan also involves the Treasury exercising its warrants to purchase 79.9% of the GSEs’ common stock and a relisting on the Нью-Йоркская фондовая биржа. Ackman said his firm owns 210 million shares across the two enterprises, with 10% being preferred shares.
According to KBW, if capital rules are not changed, current normalized earnings imply returns on equity of 8.3% for Fannie and 9.3% for Freddie. The analysts agree with Ackman that a 2.5% capital level would be appropriate, compared with the current 4.5% requirement.
Компания "Уэллс-Фарго analysts said Ackman’s plan “prioritizes political wins and market stability over structural changes, deferring major policy decisions to a future date.”
They said Ackman’s previous plan, released in April, called for broad structural changes such as exiting conservatorship via a new capital framework, limits on GSE charters and another initial public offering.
But his new proposal “favors Agency MBS investors by preserving the implicit guarantee through continued conservatorship,” the analysts wrote.
“Any full release would hinge on midterm outcomes as a Democratic-controlled палата представителей would likely block it,” they said. “Ultimately, this plan may defer structural questions to a future administration while allowing GSEs to build capital and move incrementally toward eventual release under the 2021 framework.”
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