FREJN - Freddie Mac: A Trump Trade That Ran Its Course
2025-03-21 07:23:53 ET
Summary
- If you profited from Freddie Mac shares pre-2024 elections, it's time to cash out; this trade is over, and new investments are risky.
- Freddie Mac remains under government conservatorship, meaning shareholders don't benefit from profits, dividends, or control over the company.
- The government has no incentive to end conservatorship soon, as Freddie Mac's earnings stabilize the housing market and benefit the US Treasury.
- Freddie Mac's capital shortfall makes it unprepared for privatization; a smooth transition is unlikely, and the path to independence is long and uncertain.
Investment Thesis
If you bought Federal Home Loan Mortgage Corporation ( FMCC ) - Freddie Mac thereafter - shares before the November 2024 elections to ride the wave of optimism that Trump's return to office might shake up the housing market, congratulations! - you made a solid move and probably made some good money. But here's the deal: It's time to take your profits and get out. I know, I know - people love to say "Let your winners run". Not this time!...
Freddie Mac: A Trump Trade That Ran Its Course