Fannie Mae Hoping for Strong Spring Housing Surge

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Fannie Mae Hoping for Strong Spring Housing Surge

Fannie Mae’s (OTCQB: FNMA) is hoping there is new economic optimism is in the air that could nullify the negative effect of proposed legislation by Congress that would replace it with a private entity.

However, industry experts agree that the chances of such major legislation passing in an election year are slim

Meanwhile, despite the deterioration in economic activity at the end of 2013 that has continued through the first quarter of this year, growth is expected to pick up in the second quarter and build throughout the summer, firming to approximately 2.7 percent for all of 2014, according to Fannie Mae's (Economic & Strategic Research Group.

Spring Weather Should Boost Growth

The near-term outlook remains somewhat clouded due in part to an unsustainable build-up in inventory in the second half of last year and as downside effects from the winter have yet to fully materialize. However, the return of weather to seasonal norms should help boost growth in the second quarter, supported by consumer spending, business investment, and housing starts.

“We expect economic and housing growth to emerge from the tough winter weather and gain momentum into the spring and summer seasons,” said Fannie Mae Chief Economist Doug Duncan. “Fiscal and monetary policy jitters appear to have waned and the most recent employment numbers came in at reasonable levels, helping to ease concerns of a significant slowdown or risk of recession, “ he added.

 FNMA’s share value closed at $3.94 on Apr. 2, down 4 cents from $3.98, the previous day’s close, on volume of 7,868,703 shares.

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Globalstar Reports $235 Million Loss

In another sector, Mobile satellite service provider Globalstar Inc. (OTCQB: GSAT) stock volume soared Apr. 2, with 4,370,828 shares changing hands, nearly double its three-month average volume of 2,637,488 shares.

The uptick in volume is in part being fueled by Covington, La.-based company’s recent release of its 2013 4Q results.

Here are the highlights:

Revenue was $21.0 million for the fourth quarter of 2013 compared to $19.1 million for the fourth quarter of 2012, an increase of 10%, which was due to increases in both service revenue and subscriber equipment revenue.

Net Loss

However Globalstar’s net loss increased during the fourth quarter of 2013 reflecting the impact of substantial non-cash charges resulting from an increase in the value of the Company's derivative instruments, which was driven primarily from a 61% increase in the Company's stock price during the fourth quarter of 2013. The company reported a net loss of $234.8 million for the fourth quarter of 2013 compared to $19.0 million for the fourth quarter of 2012.

The increased net loss was due also to several other non-cash items, such as higher interest expense driven by decreases in the amount of interest being capitalized and note conversion activity, as well as higher depreciation expense as the Company placed additional satellites into service during 2013.

Shares of GSAT closed at $2.81 on Apr. 2, up 10 cents from $2.71, the previous day’s close.

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Sirius XM Holding Inc.’s Stock Volume Soars  

Meanwhile, Sirius XM Holdings Inc. (NASDAQ: SIRI) stock volume soared Apr. 2, with 167,444,208 changing hands, more than twice it three-month average volume of 77,081,219 shared.

The uptick in volume could be a reaction to New York-based satellite radio company’s share value continuing to climb upwards, since it hit a low for the year of $3.13 on Mar. 27.

Still, the satellite-radio provider Sirius XM Holdings Inc. (NASDAQ: SIRI) has come a long, long way from the time its share price crashed at 5 cents in February of 2009.

Sirius’ strong recovery from its low point was evident in its fourth-quarter and full-year 2013 earnings reported on Feb. 4, 2014.

The company generated record revenue of $1.0 billion and $3.8 billion in the fourth quarter and full-year, respectively, each up 12%. Net income for the fourth quarter and full-year were $65 million and $377 million, respectively, or $0.01 and $0.06 per diluted common share, respectively.

Income from operations was $245 million and $1.0 billion in the fourth quarter and full-year 2013, respectively. Adjusted EBITDA increased 41% in the fourth quarter to a record $326 million. Full-year 2013 adjusted EBITDA was $1.17 billion, an increase of 27% from $920 million in 2012.

Potential Lawsuits Not Hurting SIRI

Despite a myriad of law-firm of Sirius XM for potential stockholder claims as a result of the satellite-radio investigations company’s proposed acquisition by Liberty Media Corp., its stock price is holding its own.

On Jan. 3, 2014, Liberty Media make an offer to buy Sirius for about $10.4 billion at a rate of $3.68 per share. The deal involves creating a new class of stock called Series C, adding 0.076 per share to give the company a total market value of as much as $27 billion.

Although the pending acquisition has triggered a slew of potential stockholder lawsuits, without Liberty Media, Sirius XM might not have been here today.

That’s because in 2009, Liberty Media kept Sirius XM from going bankrupt with a $530 million loan. As a result, Sirius XM has been able to build a subscriber base 25.6 million strong. It’s done so with a line-up of paid-radio choices including classical, rock, alternative, country, sports and live concerts, including the extremely-popular morning man Howard Stern serving as the company’s anchor.  Moreover, having new cars equipped with XM receivers has also boosted the company’s popularity and acceptability. However, Sirius XM still faces brutal competition from such digital radio competitors as Pandora Media Inc., AOLRadio and Apple Inc.

On Apr. 2, SIRI’s share price closed at $3.34, up 10 cents from its closing price of $3.24 the previous day on volume of 66.9 million shares.

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