To my way of thinking, if Donald Trump becomes the Republican candidate in the 2016 presidential election, shares of Fannie Mae (FNMA) rise; if Trump wins the presidency, FNMA soars.

Not much has been written about the connection between billionaire real estate magnate Donald Trump’s bid for the presidency and FNMA, but the growing prospect of a President Trump suggests to me a most fortuitous catalyst to unlock the market value of FNMA common shares.

Though not ideologically of the Barry Goldwater school of conservatism, Trump knows the corrosive effects of a Soviet Union-style institutionalization of entities such as Fannie Mae and Freddie Mac.  I glean this from Trump’s emphatic stand about the importance of not watering down the Second Amendment, especially via Executive Branch fiat.  During the debates, anyone observing the tone of his response when asked about a citizen’s Constitutional right to bear arms may sense a Reaganesque quality to Trump’s devotion to family, economics and defense, a uniquely Reagan signature that’s been slyly intimated by Trump.

As a quintessential American-style businessman, I strongly believe his proclivities for pointing to the US Constitution when it’s time to deal with the domestic quagmire of Fannie Mae will overhaul the blatantly un-Constitutional arguments set forth by the US government in defense of the Third Amendment to the Senior Preferred Shareholder Purchase Agreement (SPSPA) of Aug. 12, 2012.

I cannot fathom how a pro-business Trump would take a blind eye to allowing a government confiscation of investor rights.  In fact, The Donald has/had taken a stake in FNMA, as of March 2014.  (See page 43 of D. Trump’s presidential campaign disclosure, filed with the Federal Election Commission.)  Please note the date, March 2014; that’s approximately 18 months after the signing of the SPSPA.  Why would Trump invest in a company that’s slated for a Washington confiscation?

For those not familiar with the Third Amendment to the SPSPA of Fannie Mae and Freddie Mac, drafted by the Federal Housing Financing Agency FHFA and US Treasury, the best article I could find that discusses the salient points to the lawsuits filed against the FHFA and US Treasury can be found at Forbes Magazine, with a good update to the legal proceedings at Seeking Alpha.

So, what’s the bottom line?

Simply put: if Donald Trump becomes President of the United States, the implication is that the Republicans will maintain control of both houses of Congress, handing Trump a mandate by the people to square the “mess,” as bank analyst Dick Bove puts it, and restore property rights to Fannie and Freddie shareholders.  In which case, a Constitutional slap-down to the Obama Administration’s attempted hijack of a legacy GSE may unlock as much as a $21 per common share value to investors by 2019, according to Bove (one of the best bank analysts on Wall Street).  My estimate calculates to $24.  Close enough.

At today’s price of approximately $1.50 per share, Bove’s estimate of FNMA implies a possibility of a compounded annual rate of return of 143% for each of the three years.  That’s the quality of returns I look for from a stock.