Michael Burry Warns Fannie Mae and Freddie Mac Could Become 'Worthless' as Trump-Era Gains Collapse
FNMA is trading near its 52-week low of $3.6 (12% above the low).
Summary
Michael Burry, known for 'The Big Short', publicly warned that Fannie Mae and Freddie Mac could become 'worthless' based on technical chart patterns and fundamental risks. He disclosed making recent moves in both OTC stocks, which have retraced essentially all gains since Trump's election. Burry cited a 'giant head-and-shoulders-and-elbows top' pattern and noted that the government's senior preferred stock liquidation preference continues to grow, with Wall Street's base case shifting toward Treasury converting that preferred into common equity, diluting existing common shareholders by at least 90%. The stocks are down sharply: FNMA -31.64% over the last month and -62.35% YTD; FMCC -29.90% over the last month and -63.71% YTD. This follows Fannie Mae's strong Q2 earnings reported in July, but the bearish technical and dilution narrative from a high-profile investor adds fresh pressure. No specific upcoming event is named.
At the time of this announcement, FNMA was trading at $4.04 on OTC in the Finance sector, with a market capitalization of approximately $4.7B. The 52-week trading range was $3.60 to $12.87. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Benzinga.