Freddie Mac (FRE)

FRE's current share price reflects investor panic and not the economic value embedded in this world class franchise. While it's book value has been cut, FRE's returns on new business have increased remarkably, paving the way for higher normalized earnings power over the next cycle...and making this business, at current prices, absurdly cheap.

Valuations like today's, especially for wonderful businesses like FRE, only arise when investors have given up on a company and have concluded that the current environment is permanent...it's not. The phrase be greedy when others are fearful, and fearful when others are greedy comes to mind.

FRE's augmented profitability going forward should more than make up for past losses as current mortgage market turmoil plays itself out over the next year or two. The current environment actually favors Freddie and Fannie over all other mortgage participants. They are able to command significantly higher prices in their credit guarantee business, not to mention that their retained portfolio contains only the highest level of credit quality, which going forward is likely to create a steady increase in book value (which is also likely to be considerably higher than its current mark to market value).

Let's not forget that their government charter gives them the unique ability to issue long term callable debt, enabling them to accurately match the duration of their investments in mortgages with their liabilities. The result is sustainably high long-term ROE's.

The bottom line is that Freddie (with the exception of Fannie) possesses unscalable barriers to entry, and generates above average earning power during normal times, which common sense dictates is likely to only get stronger as current competition is nearly non-existent...Those with the patience to wait should be rewarded with returns approaching 100% from todays prices within 2-3yrs

Finally bought my 1st shares of Freddie Mac (FRE) shares today
WOW, I have been following this stock for a long long time and I decided NOW was the best time to buy.
I was lucky I bought my shares for $1.80
I was worried I would miss out since it has been steadily climbing since week.
My Mom has all of her retirement in FRE stocks and she was getting a little worried, but this morning I told her "Don't worry Ma, it's gonna be OK. FRE is getting of conservatorship and you will start to get your dividend checks very soon."
And it can't be soon enough.
Ma needs a new hip. She broke it about 10 years ago after test driving a Pontiac Aztec..... It was just too low to the ground for her...
So anyway... to make a long story short... I cashed out the rest of the remaining equity line on my house today and bought shares.
Never mind that I am underwater on my first mortgage (damn interest only loan), but I figure with what I make off this stock, I will be just fine. My broker wasn't too thrilled and he actually tried to discourage me...
I am guessing he just didn't want me to get in on a good thing!
I mean come on....he works behind a desk at a bank... and not a very good bank either (formerly WAMU) so what does he know!
So the way I am figuring.... by the time this stock soars, I will have made enough money to buy a 2010 or 2011 Hummer H3! It's higher off the ground, so Ma can get in it easier (on account of her bad hip). I am just happy gas prices are back down below $4 a gallon FOR GOOD now too (thank you Mr. President).
I am just SO SO excited that I was able to get in on this deal in time........gosh.... I just don't know what to do next..... Maybe I will buy a time-share in Detroit!

Big brother Socialist won't let it fail. There is just no way. When they (the socialist party) announce that they have approved the bailout, (and they will approve the bailout) the shares should jump significantly. BTW as long as they continue to funnel money to the DNC they will have political ties for the foreseeable future.

Note to Self: 2 star rating w/ P/E ratio of 13.2. Trying to track it after falling to .25/share. Now govt backed hope to see long term gains. expect to see rocky start on this rating.

As with FNM, it can't be allowed to fail, it has to be sold back into the private sector, and it has to go up in price in order for this to work. It's the government giving you money!

I think the worst is over for Fannie and Freddie. With the Government bailout a virtual certainty, and government conservatorship a reality, these companies will not be allowed to fail, and 5 years from now, we will look back and wish we had bought these companies at these depressed prices.

AIG = FNM = FRE

Freddie (FRE), is up 14 cents to $1.74 and 6,800 calls along with 2740 puts traded. Implied volatility is falling, to 162 from 190 yesterday, amid selling of Jan10 2.5, Sep 2, and Jan10 1 calls.
May be slow moving up, but some things are better slow, don't you think?

I was just waiting for this stock to drop back below $6 I should have probably waited until after FNM reports tomorrow. This stock could lose another 10% by friday afternoon. But I'll make up for it when I pick up FNM at under $8 a share on Monday.

Gut feeling here that shareholder equity won't be totally wiped out. This is one of those picks I feel comfortable making on CAPS, but wouldn't sink my real life money into.

doesnt take a rocket scientist to know this one is goin up 4 years from now!

a) U.S. Shortselling-U.S. SEC Emergency Order

b) OSC Temporary Order Prohibiting Shortselling Canadian Financial Securities

Long haul stock pick...The only way they go under is if the US Govnt goes under ... Thankfully Bush is only at the helm for a few more months ... he did put a good effort in at breaking us though ...

Freddie has the assests has the managment and once they beat this crisis that was caused by the same group that has been talking them down the company will get stronger financially and politically and the stock will rise.

Think it will bottom out this week after Fannie Mae reports. Two of the employees I know who work there believe a turn-around will show up about the end of year, especially once elections are decided.

New investors please beware!!!! the reason stocks like these have made gains is only because of the uneducated investors( n i actually dont mean that offensively) have bought into them with the mentality " they were huge before so they will be again, n its a good time to get in". that is not true. these companies have burned through money like hellfire n have proven to have shady management. they r bubbles waiting to burst hard!!! plus for new investors a bubble is an on overly large rise in value or false rise in value that is waiting to blow n plummit!!!! dont buy them!!! there r much more intelligent buys out there!!!

Needless to say, Fannie Mae and Freddie Mac are the major players in mortgages real estate. The current economic recession and collapsed housing markets was a result of the simultaneous combination of many factors. These companies are still and will remain crucial to the future economic recovery, and strong enough to weather the current storm. Though they may never regain their full former strength, look for an upswing in stock prices in the next few years, as a new administration steps into action, with full recovery in five to ten years.

Freddie is a publicly traded financial company chartered by the United States federal government in 1970. The company’s overall mission is to provide liquidity by purchasing mortgages and mortgage-related securities from primary market institutions, such as commercial banks, savings and loan associations, mortgage companies, securities dealers bundles them up and sells it to other investors.

The company sees huge potential in the credit guaranty business where it currently has 43% market share. Endorsing the same, majority of growth in the next decade would be driven by underserved minority groups. Also, the tight spread environment has helped in keeping the funding costs low. Moreover it is making progress in the remediation of systems including further automating reporting of activities in its retained portfolio, debt and derivatives segments.

The company has surplus capital over and above the 30% stipulated even after completing the $2 billion common share repurchase program. It has a good risk management system in place with a duration gap of zero months. The management feels that the credit level and interest rate risk are at controllable levels. Credit losses remained flat and low at one basis point of the portfolio, with loan to value falling from 67% to 55% and delinquency trend improving to 51 basis points.

Though the year 2006 has not been that good for the housing market it expects a turnaround in the coming year with favorable interest rates movements. However the inventories have risen to record levels along with slow price appreciation, meaning excess supply and affordability would not be an issue. Finally, Freddie Mac has performed well even in difficult economic cycle, being very committed to its long-term mission of providing continued access to mortgage credit. All these factors taken together makes it an attractive buy.

bailout