Fannie, Freddie Shares Rise on Big Volume
(Updated with closing stock prices and volumes and Malcolm Polley comment)
NEW YORK (
) --
Fannie Mae
(FNM)
and
Freddie Mac
(FRE)
shares were up big on unusually heavy volumes Friday, even though few sane people believe the stocks have much value.
"I think they're worth zero," said Malcolm Polley, CIO of Stewart Capital Advisors, a $900 million money manager near Pittsburgh. "It's the same with
AIG
(AIG) - Get Report
. It's ridiculous that people are allowed to trade in these securities. They're being treated as lottery tickets."
Indeed, many believe the government should not allow speculators to profit on shares of the two mortgage giants, considering that when it took them into conservatorship a year ago, preferred shareholders were wiped out.
Still, the speculation continues, with Friday's rally apparently sparked by the mere fact that Fannie was allowed to remain on the
New York Stock Exchange
after its shares stayed consistently above the $1 mark through the month of August. Fannie was threatened with a delisting in November 2008 after 30 days of trading below the $1 mark.
Reuters
reported that Freddie Mac got a similar reprieve, but that could not immediately be confirmed.
Though shares of the distressed mortgage lenders have rallied strongly on heavy volumes all month long, Friday's activity stands in contrast to that of other so-called "zombie"stocks, such as AIG,
Citigroup
(C) - Get Report
and
CIT Group
(CIT) - Get Report
, which are trading less, relative to their average volumes over the last three months.
Fannie shares closed up almost 8%, near the close on volumes of nearly than 220 million shares - more than double the full-day average over the last three months. Freddie was up more than 5% on volume of about 96 million shares, about 75% higher than its three-month, full-day average. By contrast, Citigroup's volume was at 574 million, below the 584 million daily average it has seen over the last three months and well shy of the more than one billion share per day pace at which Citi shares traded Wednesday and Thursday.
The relatively slower activity in Citigroup, AIG, and other names makes sense ahead of the long holiday weekend. The price of Citi shares was up more than 1%.
--
Written by Dan Freed in New York
.
