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Market cap

—

Earnings × Multiple

Diluted shares

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Post warrant exercise

Target price

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Per share

Upside

—

vs entry

Model Inputs

Combined GSE earnings ($B) $25B

P/E multiple 15x

Base shares outstanding (B) 1.96B

Dilution % exercised 0%

Warrant ratio (dilution multiplier) 5x

Dilution Scenarios

Worst — max dilution

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95% / 20-to-1 warrant

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Base — 80% dilution

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80% / 5x warrant

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Best — no dilution

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Common shareholders intact

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Share price vs P/E multiple

Green = above entry | Red = below entry

Key Catalysts & Dates

Nov 2026	Midterms — political pressure to act urgent
Sep 2025	Warrant date expiration — Treasury deadline watch
Recap 2.5%	Expected recapitalization rate for release target
FNMA ~2yr	Fannie Mae projected release timeline
FMCC ~2yr	Freddie Mac projected release timeline
Jun 2026	Bank capital levels may drop — accelerates path watch
Post cap	Dividends enabled after capital levels met target

US Government Realized Value

SPS Earnings Growth (100% owed to Treasury)

Year 1—

Year 2—

Year 3—

Year 4—

USG holds senior preferred shares — 100% of GSE earnings owed back via SPS increase until capital levels are met. Strong gov incentive to release ASAP.

Thesis Summary

Bull case

GSEs earn $25B+/yr. At release, financial firms trade 15–20x. Even with 80% dilution, common stock has multi-bagger potential. Trump admin is motivated — releasing unlocks $300B+ for Treasury.

Bear case

Maximum 20-to-1 warrant exercise wipes common upside. Political gridlock delays exit indefinitely. Capital requirements could reduce distributable earnings. Congress could eliminate common equity.

Key variable

Dilution is everything. No-dilution target is ~$190/share at 15x; max-dilution lands ~$13/share. How warrants get exercised — and whether common holders get any concessions — is the whole game.

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