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I have been saying for some time now that Freddie Mac (FRE) and Fannie Mae (FNM) are worthless organizations. Both government sponsored organizations have massive debt loads that they can never hope to repay. The two firms have a combined market cap of just $1.1 billion dollars. The government owns $145 billion dollars worth of two companies that do not make even one cent of profit. These 2 companies only exist to prop up the mortgage market.

While both companies will likely stay in business (due to the federal government), common stock shareholders will ultimately lose everything. Both stocks have been booted from the New York stock exchange for failing to hold a $1 value. Shares of Fannie Mae dropped 40% and are currently trading at 56 cents. Freddie Mac isn’t faring much better dropping 40% to 73 cents per share. Investors shouldn’t go anywhere near shares of Fannie Mae or Freddie Mac. These 2 stocks have penny stock daytraders written all over them.

Disclosure: The author holds no position in Fannie Mae or Freddie Mac

Source: Fannie Mae, Freddie Mac: Finally, Official Day Trader Status