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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (29045)	11/21/2007 1:19:56 AM
From: Spekulatius	Read Replies (1) of 78751

FRE - not surprised they are having difficulties. FRE equity is 25B$ (17B$ in common and about 8B$ in preferred) and their mortgage portfolio is 790B$ plus they insured a total of 1600B$ in mortgages against default. Obviously with such a leverage, even a small change in fair value will wipe out a lot of equity. I am not exactly sure how large the losses are. The headline number is 2B$ for the last quarter but there is also mention of 8B$ change in fair value of the mortgage holding. Those are obviously non-realized losses but if they market to market they would have to show those also. However, how do you market to market when you are the market (together with FNM).

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