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The Case For Fannie Mae: Unpacking The Motions For Summary Judgment

Seeking Alpha, By Charlie Harrison

Numerous plaintiffs have file suit in various courts alleging that an agreement between the FHFA and Treasury, which has the effect of transferring all the earnings of the Federal National Mortgage Association, commonly known as Fannie Mae (OTCQB:FNMA) to Treasury, should be set aside. In May 2014, Bill Ackman of Pershing Square Capital Management, LLC presented a Fannie Mae history and valuation range for the common of $23 to $47 per share. The common stock of Fannie Mae is hovering around $3.60 as of early September 2014.

In addition to Pershing Square’s investment, Bruce Berkowitz of Fairholme Capital and Carl Icahn have both reportedly taken positions in Fannie. Clearly, very successful investors perceive value in Fannie in the face of the litigation risk. I thought it would be useful to the lay investor to read a summary and evaluation of the back and forth of the key legal arguments taken from the briefs for the Motions to Dismiss and Motions for Summary Judgment in suits filed by Perry Capital and Fairholme.

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