Freddie Mac (FMCC) shares were assumed at Outperform as Wedbush analyst Henry Coffey awaits possible action from the Trump administration to recapitalize the mortgage giant, "put it on the path to leaving conservatorship, and monetize Treasury’s investments in the company."
U.S. Commerce Secretary Howard Lutnick said last week he would like to see something get done by Q1 2026. "Big Short" investor Michael Burry has contended that a relisting is "nearly upon us." Meanwhile, Bill Ackman has said that Fannie Mae (FNMA) and Freddie Mac (FMCC) were still a long way from being ready to IPO, though he offered several ways to potentially accelerate the process, such as the U.S. Treasury exercising its 79.9% warrants in both companies.
Coffey laid out the immediate risk to his investment view: "the uncertainty about exactly what course the Administration is likely to pursue to monetize its investment in FNMA and ultimately recap and release (from conservatorship) both government-sponsored entities (GSEs, Fannie Mae and Freddie Mac)."
He sees "reasonable" chances that the administration "will proceed in a manner that does not put current share value at risk and that raises the capital needed for FNMA to exit conservatorship and, to transfer mortgage risk back to the private sector over time," the note said.
Wedbush's Outperform rate compares with the SA Quant system rating of Strong Buy, as well as the average SA analyst rating of Buy and the average Wall Street analyst rating of Hold.
FMCC shares were down 7% in Friday afternoon trading.
No comments:
Post a Comment