Keefe Bruyette notes that a tweet by Bill Ackman, who owns Fannie Mae (FNMA) shares valued at $516M as of January 3rd, arguing for significant upside in the common shares followed by a letter from Treasury and FHFA providing some guidelines for GSE privatization drove shares of both Fannie Mae and Freddie Mac (FMCC) up sharply last week. While the substance of the Treasury/FHFA letter was not very meaningful, in the firm’s view, it does suggest that the Biden administration expects an attempt at GSE privatization and wants to lay out some guidelines before the new administration takes over. Finally, while Keefe Bruyette thinks the Trump administration is likely to attempt privatization, meaningful hurdles exist.
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