The story surrounding the GSEs’ continues to get more interesting, as Bloomberg is reporting that Bill Ackman has acquired large stakes in the common stock of Fannie and Freddie.  This comes on the heels of Bruce Berkowitz’s proposal to buy parts of Fannie and Freddie through converting preferred stock to common, while executing a rights offering to raise another $17 billion.  Ackman and Berkowitz worked well together on their home run investment in General Growth Properties during the financial crisis, which had some similarities except for GGP didn’t have government involvement.  Based on the rule of absolute priority, for the common to have any value, the preferred would have to be paid in full.  I believe in any normal reorganization or bankruptcy the common of both companies would have significant value but of course the wild card is the government.  We maintain our long position on Fannie Mae preferred and I believe it is very positive that more dialogue is occurring over these important issues.  (Long FNMAI)