Bove Sees Hope In Last Week’s Fannie Mae Settlement

Shares of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) had a small rally Monday morning following Friday’s surprise settlement with pre-2008 shareholders who had accused the agency of fraud for misrepresenting its finances. Even though this settlement explicitly relates to pre-conservatorship shareholders, Rafferty Capital Markets VP of equity research Richard Bove sees a connection with other cases winding their way through the courts.

“Fannie Mae’s conservator is implicitly arguing in a number of other lawsuits that the government took over a bankrupt company in 2008 and, therefore, would have no obligation to make payments to any groups of plaintiffs,” Bove writes. “If the company...