investingfromtheright

I am retired and take educated guesses on all things financial.

December 07, 2006

December 7, 2006: Fannie Mae the stock and Fannie May the chocolate

Fannie Mae recently submitted their 10k.

Generally, Fannie Mae presents excellent intelligence on the home market in the U.S.

The current business environment is extremely competitive and challenging. Lots of other mortgage products and bundles of various quality mortgages are being purchased by the private sector. Fannie Mae still has not addressed their fiascos in the market since 2003. They must do this to improve profitability.

The decline in its retained mortgage portfolio in 2005/06, with the additional burden of net interest margin compression, should result in lower earnings and lower growth during these two years. Resumption of portfolio growth seems unlikely, in my opinion,until Fannie Mae becomes a more timely financial filer, which may not occur until 2008 or 2009.

Expense levels are high and not expected to decline through at least 2007.


Fannie Mae also is exposed to a modest decline in home prices in 2007,will probably be an active purchaser of lower quality loans resulting in potential losses in exchange for a higher interest rate of return,will sustain derivative losses from less than able management,be strapped with high administration expenses and high expenses to comply with more stringent reporting regulations, and will experience a likely reduction in the size of the overall loan portfolio.

I see FNM at the same share price (approximately 58.00) or lower at this same time next year.



A BETTER FANNIE MAY:

Instead of Fannie Mae the stock....buy Fannie May, the wonderful Chicago chocolates.
I received a few positive e-mails regarding www.fiveherds.com bison gourmet steaks.
Obviously, a gift of meat is not for everyone. But FANNIE MAY chocolates are the best.

Order yours from www.fanniemay.com

HIGHLY RECOMMENDED. I have found the romantic returns from their dark chocolates, especially, dwarf the price of the product.

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