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Ending Fannie and Freddie Underperform

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July 10, 2008 – Comments (7) | RELATED TICKERS: FNMA , FMCC

Just over 2 months ago, I picked FNM and FRE to underperform. I did not believe the mortgage industry was healthy, and neither were these two semi government institutions.

Today it is time to close my picks. Not that I believe the fundamentals have improved for these companies. Quite to the contrary: if the government does not bail them out, they will go under. However, I don't believe Paulson c.s. will allow these companies to go under. Hence it is time to harvest about 100 points on these two combined and move on.

On a related note, I often put my money where my mouth is. In this case I didn't. Oh well, it's no use crying over spilt milk. Although, even at today's high milk prices we are talking about a few thousand gallons of the stuff! 

7 Comments – Post Your Own

#1) On July 10, 2008 at 10:47 PM, MaskedMan2007 (99.17) wrote:

Well, interesting comment, I openend underperform pick on both on July 10th. I think that the stock will continue to fall for few days, before any actions will be taken.

I think that these could be the next catalyst that will bring the market down to 10 000 in the next few days / weeks.

The rescue would have the effet of a catalyst for a long waited bear bounce! :)

 

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#2) On July 11, 2008 at 10:18 AM, kdakota630 (29.21) wrote:

I ended them yesterday just before they started to rebound a touch.

I was going to reload them both late last night but decided against it because I'm convinced that they'll be bailed out as well.  In retrospect, I should've reloaded as planned.  LOL!  Oh well.

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#3) On July 11, 2008 at 10:41 AM, capsoregime (51.39) wrote:

Ooooops. :P

 

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#4) On July 11, 2008 at 4:03 PM, ahabswife (64.17) wrote:

I think your right Leo these aren't the kinds of lenders that they will let fall throught the floor.

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#5) On July 12, 2008 at 11:19 AM, leohaas (29.99) wrote:

Thanks for your comments!

Due to the low opening on Friday, my actual point gain for FNM is 64 and almost 72 for FRE.

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#6) On July 17, 2008 at 12:46 AM, mgiv (41.56) wrote:

Why not close out:

IDMC.PK
NOVS.PK
TOUS.PK
NNRI.PK

They do nothing for you portfolio.  In fact they gradually lose while the S&P tanks.

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#7) On September 08, 2008 at 10:59 AM, leohaas (29.99) wrote:

OK, so the bail out happened over the weekend. Clearly, I should have stayed in (or better yet, opened up another thumbs down call on them).

Where this ends up is 100% speculation. The risk of the shareholders being wiped out is obvious, but if these companies survive, you could make a bundle by buying today. Not sure what I will do...

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