Don't look too closely, you might jinx it, but our latest stock pick, Federal National Mortgage (FNM), is up. And I don't mean just up from the $4 low it plummeted to after we bought FNM at $7.77 a share...after Corkface (What kind of name is that?) said in the comment section here that FNM was going to zero. And Barron's agreed. No. I mean UP, up. On a late block--probably some poor short--FNM jumped to $7.95 at the close today.
It's been a fantastic week.
Thanks to the this recent action in FNM, our Hot Tip portfolio is ahead on a stock pick for the first time in six months or more. I think The Famous Author's been playing options, doing even better.
Why's the stock up? You mean besides the fact that we picked FNM here, the investment blog of all investment blogs? Well, it seems Lehman Brothers, Merrill Lynch, Keefe Bruyette, and several other big investment firms all issued reports this week stating Fannie doesn't need new capital now, that the housing market has to deteriorate another 30% before Fannie's capital could be depleted, and even then, the Treasury might still be able to avoid nationalizing the mortgage finance agency.
All the Wall Street reports said there was no reason to wipe out shareholders. I think my pal Henry Paulson, U.S. Secretary of the Treasury, is making his buddies on Wall Street buy the common, then talk it up with these reports. Hey, whatever works, Hank. The Street has much experience doing Washington's dirty work.
One report said the common was going to $20.