This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fannie and Freddie Stocks Are Still Hot (Update 4)

Updated from 4.14 p.m. EST with market close information, additional information from the Federal Housing Finance Agency, and comments from Paul Hastings partner Kevin Petrasic and Pepper Hamilton partner Timothy McTaggart.

NEW YORK ( TheStreet) -- The wild action continues for Fannie Mae (FNMA) and Freddie Mac (FMCC).

Shares of both government-sponsored mortgage giants popped again early on Wednesday, a day after both soared on the prospect that the recapture of massive deferred tax valuation allowances could point the way to the repayment of government bailout money. Both companies were taken under government conservatorship in September 2008.

Fannie Mae's shares were up 50% to close at $1.08, after rising 38% on Tuesday. The Wall Street Journal on Tuesday called attention to a filing last Thursday, when the company said it would delay filing its annual 10-K report to the Securities and Exchange Commission.

Fannie said it would need extra time to analyze whether or not it could recapture some of its $61.5 billion valuation allowance for deferred tax assets (DTA), as of Sept. 30.

Shares of Freddie Mac rose 54% also closing at $1.08, following a 35% gain on Tuesday.

As of Sept. 30, the government had $116.1 billion in preferred Fannie Mae shares, and Fannie had paid the Treasury $28.5 billion in dividends.

Fannie reported a third-quarter profit of $1.8 billion, which was the company's third consecutive profit. Earnings for the first three quarters of 2012 were $9.7 billion, compared to a net loss of $14.4 billion during the first three quarters of 2011. The company was also able to pay its third-quarter dividend of $2.9 billion in the Treasury's preferred shares, without resorting to further government borrowings.

Fannie in the first quarter benefited from a major settlement of a long-term dispute with Bank of America (BAC - Get Report). The bank agreed to pay Fannie $3.6 billion in cash and roughly $6.75 billion to repurchase about 30,000 mortgage loans.

Freddie Mac filed its 2012 10-K on time, on Feb. 28, saying its valuation allowance for deferred tax assets (DTA) was $31.7 billion, as of Dec. 31. The government held $72.2 billion in Freddie Mac preferred shares at the end of 2012. Freddie earned $11 billion during 2012, swinging from a loss of $11 billion in 2011. The company paid $7.2 billion in dividends to the Treasury during 2012, for a total of $23.8 billion in dividends paid since the company was taken under conservatorship.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $15.56 -0.51%
FNMA $2.61 -3.69%
FMCC $2.51 -3.46%
AAPL $132.65 1.82%
FB $81.91 0.47%

Markets

DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs