"I personally own both Fannie Mae and Freddie Mac common stock in good size, Burry wrote in his Substack newsletter, Cassandra Unchained. I appreciate that both stocks trade in the pink sheets, unavailable to many institutional investors and, unlike all the big AI and tech names everyone loves, these are not over-owned. The two government-sponsored enterprises (GSEs) currently own 62% of all outstanding U.S. home mortgages and back roughly 70% of conforming loans."
"The Trump administration has reportedly been exploring a possible stock offering for the GSEs. Federal Housing Finance Agency (FHFA) Director Bill Pulte has floated selling 5% of the government's position, while outside investors including billionaire Pershing Square founder Bill Ackman have pitched alternative approaches. Burry argues that Trump's control of the FHFA through the National Economic Council, led by loyalist Kevin Hassett (a leading candidate for the next Federal Reserve chair),"
"Burry said he expects an IPO valuation between 1.0x and 1.25x book value for each GSE, with the stocks trading at 1.5x to 2.0x book value in the year or two after the offering. His estimates assume the FHFA lowers the capital reserve ratio for the enterprises from the current 4% to 2.5% a framework also supported by Ackman and other analysts."
Fannie Mae and Freddie Mac back about 62% of U.S. home mortgages and roughly 70% of conforming loans. The Trump administration has explored a potential stock offering for the GSEs, and FHFA leadership has floated selling 5% of the government's stake while outside investors proposed alternative approaches. IPO valuation scenarios estimate 1.0x–1.25x book value at offering and 1.5x–2.0x afterward, contingent on lowering the capital reserve ratio from 4% to 2.5% and treating government-held senior preferred stock as zero. A unilateral conversion of senior preferred into common stock could substantially dilute existing holders; Deutsche Bank assigned about a 20% probability to such an action.
Read at www.housingwire.com
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