Recaps Take Fannie, Ahmanson in Opposite Directions

By Kulkosky, Edward | American Banker, February 12, 1996 | Go to article overview

Recaps Take Fannie, Ahmanson in Opposite Directions


Kulkosky, Edward, American Banker


Two financial giants, Fannie Mae and H.F. Ahmanson & Co., have each embarked on recapitalization programs in recent months, but with divergent reactions from investors. While the shares of Fannie Mae have climbed briskly, Ahmanson's stock has been flat at best in a rising market.

Fannie Mae announced early last month that it was issuing $1 billion of preferred stock and would use most of the proceeds to repurchase common shares. It also split the shares four-for-one and donated $350 million to its own foundation.

Ahmanson, parent of Home Savings of America, the nation's largest thrift, announced last October that it would repurchase some $250 million of its shares. And last month, it told American Banker it would shrink the size of its mortgage portfolio this year and use the proceeds to further repurchase shares.

Both strategies are aimed at strengthening profitability. Frank Raines, vice chairman of Fannie Mae, said the switch to preferred shares should leverage the profits available for the common, and the charitable contribution would end the need to fund the program every year.

At Ahmanson, the idea is to shed mortgages that are not providing an adequate return while continuing to function as a mortgage banking operation, selling most of the loans it originates in the secondary market. It is also planning a substantial expansion in consumer finance.

Why, then, the different reactions to apparently similar strategies?

Tom O'Donnell, an analyst with Smith Barney & Co., New York, said he thinks both strategies are positive. "Fannie Mae has come of age in terms of capital-structure management," he said. But investors appear to have misunderstood Ahmanson's moves, and he said he thinks the softness in the stock price provides a buying opportunity.

"The company is far from brain dead as many other thrifts appear to be," said Mr. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Recaps Take Fannie, Ahmanson in Opposite Directions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.