Traders appear to be taking profits on the massive 50 percent-plus rally in Federal National Mortgage Assctn Fnni Me OTC: FNMA and Federal Home Loan Mortgage Corp OTC: However, the uncertainty surrounding the situation leaves investors with a difficult decision when it comes to investing in the two GSEs. Common shares likely have the most upside.
However, in the event of a liquidation, common shares could end up completely worthless.
Sell Fannie and Freddie Common, Buy the Preferred (Update 3) - TheStreet
On the other hand, preferred shares, such as FED HOME LOAN MTG 5. FMCCK and FED NATL MORT ASSC 7. Preferred shares are higher on the priority list when it comes to claims on liquidation proceeds, and they have fixed liquidation values that protects them from the same type of dilution risk the common shares have. Of course, these preferred shares understandably trade at a high premium to common shares, meaning they likely have less upside in the event of a favorable outcome.
Investing in Fannie Mae and Freddie Mac is a big risk no matter what. Bill Ackman Dick Bove fannie mae freddie mac Steven Mnuchin Politics Trading Ideas General Best of Benzinga. Benzinga does not provide investment advice.
FNMAT Stock Price - Fannie Mae % Non-Cum. Pfd. Series T Stock Quote (U.S.: OTC) - MarketWatch
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