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!...

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