Mar. 18, 2014, 1:13 PM
- Fannie Mae (FNMA -15.7%) and Freddie Mac (FMCC -15.5%) get just a little sell-side love, with KBW's Bose George boosting his price targets on both to $2 from $0, though he keeps an Underperform rating on the duo.
- The PT change "incorporate(s) the possibility of a combination of a legal victory for shareholders combined with a lack of action on both the regulatory and legislative fronts that hurts the value of the GSEs," says George, who may be the only sell-sider still covering the GSEs after they were put into conservatorship in 2008.
Mar. 13, 2014, 11:20 AM
- “It’s hard to find any reasonable outcome that’s really terrible for the preferreds, given what I perceive to be the value of the business that’s already there," says portfolio manager Jeffrey Lewis, an owner of the shares. Investors in the common stock, however, are making a bet Fannie Mae (FNMA +12.4%) and Freddie Mac (FMCC +13.4%) will be allowed to become dominating private companies again and keep their profits.
- It's up to the courts to decide how investors will be treated, says Sen. Mike Crapo, who co-wrote the bill to wind the GSEs down. "We are not necessarily going to dictate the outcome."
- As for whether a bill actually becomes law anytime soon, former Senate banking panel aide Mark Calabria gives it maybe a 10% chance of getting to the president's desk this year. The dim prospects look to be giving a boost to the common shares today.
Mar. 12, 2014, 11:09 AM
- Fannie Mae (FNMA -11.7%) and Freddie Mac (FMCC -12.1%) are lower again in volatile action one day after a the release of a Senate proposal to wind the two down. Both stocks earlier took out the panicky lows made yesterday, but have bounced since.
- SA contributor Achilles Research reminds yesterday's news was completely expected and provided zero new information. The bill is the prototypical DOA legislation, especially with upcoming elections.
- The selloff, says Achilles, is a classic market panic in a couple of highly speculative and overextended names. Congress will do what it likes, but the fate of shareholders will ultimately be decided in the courts.
Mar. 11, 2014, 3:52 PM
- "While I strongly support GSE reform that protects taxpayers, such efforts should also be mindful of investors," says Senator Pat Toomey, sticking up for preferred and common stockholders of Fannie Mae (FNMA -30.6%) and Freddie Mac (FMCC -27.5%) in wake of a proposed bill to wind down the GSEs.
- "Taxpayers should be fully compensated, but once they are, investors ... should not be denied their fair share of any remaining value."
- "The government¹s actions with respect to the GSEs' profits raise serious concerns, including whether these actions lawfully respect the rights and interests of all Americans."
- Previous: Fannie and Freddie plunge on wind-down proposal.
Mar. 11, 2014, 3:06 PM
- In one of the great delayed reactions of recent times, Fannie Mae (FNMA -39%) and Freddie Mac (FMCC -36.4%) plunge in wake of the proposed bipartisan Senate bill calling for their wind-down. Like Wile E. Coyote after running off the edge of a cliff, the stocks hung around in positive territory for a couple of hours after the news hit ... then they looked down.
- The Fannie "S" series preferred is off 9.9%, Freddie's is down 18.5%.
Mar. 11, 2014, 12:57 PM
- Buying low and selling high in the GSEs continues unabated as a long-awaited bipartisan Senate bill is introduced to continue government backing of mortgages, but wind down Fannie Mae (FNMA +4.5%) and Freddie Mac (FMCC +4.7%).
- The White House: “We support this effort and believe it is a workable bipartisan approach to complete the biggest remaining piece of post-recession financial reform.”
- A bill in the more conservative House would more or less cut the government out of housing finance. With elections months away, the chance of any sort of reform becoming law this year are probably slim.
Mar. 10, 2014, 12:45 PM
- "Total nonsense," says Bruce Berkowitz of Treasury's claim that 2012's altering of the Fannie (FNMA +4.1%) and Freddie (FMCC +3.3%) bailout - in which regular dividends were scrapped in favor of the "profit sweep" - was necessary because at the time it was worried the two couldn't earn enough to make the payments (a forecast the improving housing market has made wrong).
- Berkowitz's reading of the original bailout says the GSEs could have issued more stock to Treasury in lieu of cash, and he's' scratching his head as to how both the government and the GSEs failed to know this. Conspiracy? “I prefer the simpler reason that no one bothered to read the agreement.”
- Another reason is government lawyers' reading of the documents differs with Berkowitz. Ultimately, a judge will probably decide.
- Separately, how going long Fannie and Freddie became the latest version of The Greatest Trade Ever.
Mar. 4, 2014, 12:15 PM
- "I am confident that the Board is doing its job," says Fannie Mae (FNMA +3.3%) Chairman Phillip Laskawy, responding to Bruce Berkowitz's letter from yesterday demanding the GSEs begin retaining earnings to rebuild capital, and stop borrowing to pay voluntary dividends to Treasury.
- "FHFA has retained certain authorities for its exclusive determination and control, as provided by federal statute, including all decisions relating to the declaration and payment of dividends to the United States Treasury. Our Board and management will continue to perform their duties, as provided by federal statute and delegated by FHFA, diligently and to the best of their abilities," continues Laskawy in a long version of saying Fannie will continue to take orders from the government (Freddie Mac (FMCC +1.6%) too, no doubt).
- Press release
Mar. 3, 2014, 8:35 AM
- "The conservatorship of Fannie Mae (FNMA) and Freddie Mac (FMCC) - now in its sixth year - is perpetuating the pre-crisis regulatory and management shortcomings of the companies,” says Bruce Berkowitz in letters sent to the companies' boards. Berkowitz requests both companies conserve assets, retain earnings to build capital, and stop borrowing for the purpose of paying dividends to Treasury.
- He also wants the boards to begin holding annual shareholder meetings and to relist the stocks on the NYSE to ensure more orderly and transparent trading.
- FNMA -6.3% premarket
Feb. 26, 2014, 2:49 PM
- It doesn't take much to get these names moving, and Fannie Mae (FNMA +10.1%) and Freddie Mac (FMCC +10.3%) rocket higher, with Dick Bove appearing on Fox Business saying both are $18 stocks appearing to be today's catalyst.
- Bove has been bullish on the companies for awhile, but the $18 price target is a new item.
- Last week: Fannie reports big profit; Treasury paid back and more
Feb. 21, 2014, 8:42 AM
- Q4 net income of $6.5B brings full year net income to $84B, aided by the release of the valuation allowance on the DTAs.
- "While Fannie Mae (FNMA) expects to be profitable for the foreseeable future, the company does not expect to repeat its 2013 financial results, as those results were positively affected by the release of the company’s valuation allowance against its deferred tax assets, a significant increase in home prices during the year, and the large number of resolutions the company reached relating to representation and warranty matters and servicing matters."
- The company will pay Treasury $7.2B in dividends in March, bringing the total to $121.1B vs. draws of $116.1B.
- Full report
Feb. 21, 2014, 8:31 AM
Jan. 26, 2014, 1:51 AM
- The Department of Justice and the Commodity Futures Trading Commission have investigated Bank of America (BAC) for possible improper trading by carrying out futures trades for its own purposes before executing large orders for clients.
- The probes were disclosed in June, but have only just been reported. They appear to shed light on an FBI bulletin in which the agency said it suspects traders at two unnamed banks of conspiring to manipulate rates on major orders from Fannie Mae (FNMA) and Freddie Mac (FMCC), and of front running the government-sponsored enterprises (GSEs) in the markets for interest-rate swaps.
Jan. 16, 2014, 3:32 AM
- The number of foreclosure filings dropped to the lowest level since 2007 last year, declining 26% to 1.36M properties, RealtyTrac says. The figure is less than half of the peak of 2.9M properties in 2010.
- States with the highest foreclosure rates in 2013 were Florida, Nevada, Illinois, Maryland and Ohio.
- The number of foreclosure processes started plunged 33% to 747,728, the lowest since RealtyTrac began tracking the data in 2006. Bank repossessions plummeted 31% to 462,970 properties, the least since 2007. (PR)
- Relevant tickers: PHM, MHO, TOL, KBH, RYL, HOV, SPF, FNMA, FMCC
- ETFs: ITB, XHB, MBB, MBG, VMBS, CMBS, COBO
Jan. 14, 2014, 5:02 AM
- The FBI suspects traders at two unnamed banks of conspiring to manipulate rates on major orders from Fannie Mae (FNMA) and Freddie Mac (FMCC) or of front running the government-sponsored enterprises (GSE) in the markets for interest-rate swaps.
- Front running is using advanced knowledge of an order to make a transaction first.
- Senior management at the banks "planned and encouraged this behavior because it led to higher revenue for their respective parent banks," an FBI bulletin says.
- However, the agency isn't confident it can prosecute, because the transactions involved appear to be legitimate.
Jan. 2, 2014, 1:05 PM
- Six major banks settled mortgage related lawsuits (and one - Wells - settled without being sued) with Fannie (FNMA -1.5%) and Freddie (FMCC -2.8%) last year, allowing the GSEs to collect a total of $7.9B, according to their regulator, the FHFA.
- Twelve lawsuits are outstanding and the next case scheduled for court isMerrill Lynch in June, though analysts expect this and the others to be settled before a judge or jury hears them. Of the remaining suits, Bank of America faces the largest potential tab - the FHFA wants at least $6B to settle (with suits against the bank itself and Countrywide joining Merrill).
FNMA vs. ETF Alternatives
Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold.
Other News & PR