FNMFN

FNMFN is one of the more junior Fannie Mae preferred series, which means it carries higher risk but also potentially higher reward in a recap-and-release scenario. The series has a lower coupon than some of the senior preferreds, which has historically caused it to trade at a deeper discount to par.

For sophisticated GSE preferred investors, the junior preferreds like FNMFN offer a way to express a higher-conviction view on the outcome. If all preferred series are made whole at par, the junior series with the deepest discounts offer the highest percentage returns. If preferred shareholders are impaired, the junior series would likely fare worst.

FNMFN's trading volume is lower than FNMAS or FNMAT, which means wider bid-ask spreads and more slippage on larger orders. This is a position that requires patience, conviction, and a willingness to hold through potentially years of uncertainty.