FNM (77.80) and FEB 80 CALLS Update: Possible 300-400% gain in next few days or lose it all?
Some quick DD *****
Analysts See Strong 4th Quarter Earnings (from yahoo 1/9)
biz.yahoo.com
The Street Highlights Fannie Mae: "Momentum Trading
Fannie Mae Shines in the Popular Crowd" find.thestreet.com
Still doing pretty well, but hoping it can break 78, then run a bit into earnings after the bell on Monday. The real interesting, albeit risky play here, is the FEB80 Calls (FNMBP)near $1.10. If the stock can run up on a very good earnings report and guidance, then the options could be very lucrative. The upside of the options are 300-400% and the downside risk is obviously losing all the money you invested in the option. I rarely do options, but I am giving these a shot because they are relatively cheap, FNM has not not disappointed in 16 straight quarters, and the stock is trading near the lower end of its trading of 75-84.
The February, rather than the Jan. options mitigate the risk a bit, but these are still for highly risk tolerant investors only. Do not buy these options unless you do your own DD. I have no idea whether this will work or not...I am only taking a calculated risk.
Most recent views from Briefing.com
Jan 4 2002
1:14 PM - Lehman on FNM/FRE : -- Before Open -- Lehman Brothers believes FNM and FRE are 'seriously undervalued' and should deliver solid earnings growth in the low-to-mid teens in 2002 and 2003; firm reiterates their Strong Buy rating on both companies. Firm believes FNM and FRE should benefit from the market environment (i.e. expected Fed tightening, credit costs, mortgage portfolio growth, and market shares) and should exceed their current 2002 EPS growth estimates of 15%.
Dec 7 2001
3:02 PM - Freddie Mac/Fannie Mae : -- Before Open -- Analysts point to strength in the two leading mortgage financiers: FNM and FRE. Raymond James reiterates their Buy rating on FNM, citing a recent sell-off [prompted by a rotation back into tech]; believes company is poised to continue strong growth no matter what happens to primary mortgage markets and would encourage accumulation at current levels. Raymond James also believes FRE shares deserve a better valuation given the company's outstanding track record; believes margins may be week some in 2002 but should remain above levels earlier this year. Prudential raises their 2002 estimates on FRE; sees moderate risks, low valuations, reiterates their Buy rating and $84 price target and names FRE as a core holding for financial services investors.
Dec 5 2001
12:43 PM - Fannie Mae (FNM) 77.71 -0.61: -- Before Open -- RBC Capital Mkts initiates coverage with a Buy rating and price target of $95. Firm notes that FNM's balance sheet holds 11% of the nation's mortgage debt and, with this market forecast to grow approximately 10% (CAGR) over the next decade, Fannie will likely produce superior EPS growth relative to other S&P 500 companies.
Oct 1 2001
11:43 AM - Jolson Upgrades 80.22 +0.16: -- Morning Note -- Jolson MP upgrades Fannie Mae (FNM) and Freddie Mac (FRE) to STRONG BUY from long-term BUY rating; thinks companies are a direct beneficiary of the current environment in several ways; companies ares currently able to refund repurchased and called debt at lower longer-term rates resulting in a widening of its net interest margin; companies are experiencing mortgage portfolio growth approximately 300 basis points greater than in FY00; also, mortgage losses and delinquency have only nominally increased. |
