- Both OTC stocks have lost more than half their value this year, sharply underperforming broader benchmarks like the S&P 500 and the Nasdaq Composite
- If Ackman’s bullish scenario plays out, shares could revisit pre-2008 levels in the mid-$40 range, implying roughly 900% upside from current prices.
- Burry now sees FNMA and FMCC IPOs only by 2027.
Hedge fund billionaire Bill Ackman and "The Big Short" fame Michael Burry are both making the case that Fannie Mae (FNMA) and Freddie Mac (FMCC) — the mortgage finance giants that trade as over-the-counter stocks — could be among the most compelling buys in the market right now, even as the U.S.-Israeli war with Iran rattles investor sentiment broadly.
"Some of the highest quality businesses in the world are trading at extremely cheap prices," Ackman posted on X late Sunday, before zeroing in on the mortgage giants specifically. "Fannie and Freddie are stupidly cheap. Asymmetry at its best. They could be a 10X and it could happen soon."
Burry responded directly to Ackman's post, saying, "Cannot emphasize enough how rare this is in this market."
How Have Fannie And Freddie Performed This Year?
The two stocks have shed more than half their value year to date — a steep underperformance against the S&P 500's nearly 7% decline and the Nasdaq's roughly 10% drop.
If Ackman's 10x target materializes, both FNMA and FMCC would trade in the mid-$40s, levels last seen before the 2007-08 financial crisis sent them into federal conservatorship, representing a roughly 900% upside from current prices.
What Burry's Thesis Says
In an X post on Sunday, Burry argued that America doesn't have a housing shortage so much as a misallocation problem.
He attributed elevated home prices and tight inventory to government-driven distortions — ultra-low rates, pandemic stimulus, and policy interventions — and argued that restoring market balance would require ending government control of Fannie Mae and Freddie Mac, recapitalizing them, and deploying them more effectively.
“All of this together does not speak of a housing shortage, or a housing problem,” Burry wrote. “Instead, it is a problem of current residential space allocation and mobility, and this problem was created by government manipulation of interest rates, cash money supply, and COVID lockups that went on too long and changed work/home behavior.”
The two government-sponsored enterprises, he argued, "have become atherosclerotic, inefficient government programs" and "need to be run by real mortgage executives, not government functionaries."
Burry Expects Freddie, Fannie IPOs Next Year
In a Substack post last week, Burry revealed he had been buying both stocks on the way down, first when they fell to the $6-$7 range and again when they dropped into the $4s. But he tempered his near-term expectations. "I believe the IPO is now a 2027 proposition at best," he wrote. "The Iran War seals it after the lukewarm reception on Wall Street. Higher rates may transmit to the mortgage market and impact an already shaky housing market."
Meanwhile, Bloomberg reported last week that Fannie Mae and Freddie Mac are ramping up purchases of mortgage-backed securities to take advantage of a recent market selloff, following a directive from President Trump.
The Broader Housing Crisis
The backdrop to all of this is a U.S. housing market gripped by an affordability crisis, driven by a structural shortage of homes, elevated mortgage rates, and construction costs that have put homeownership out of reach for many average-income families. The issue has become a central political flashpoint ahead of November's midterm elections.
Trump has moved on several fronts: banning institutional hoarding of single-family homes, pushing to streamline construction permits, and directing Fannie Mae and Freddie Mac to purchase $200 billion in housing loans to help lower mortgage rates.
He has also internally floated the idea of relisting both companies via IPOs or other means.
On Stocktwits, the retail sentiment was ‘neutral’ for Freddie Mac and ‘bearish’ for Fannie Mae.
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