Wells FargoShares of Wells Fargo have returned 21% year to date, following a 27% return during 2012. The shares trade for 1.8 times tangible book value, according to Thomson Reuters Bank Insight, and for 10.4 times the consensus 2014 earnings estimate of $3.90 a share. The consensus 2013 EPS estimate is $3.71.
Fannie and FreddieCommon shares of Fannie Mae ( FNMA) and Freddie Mac ( FMCC) showed continued volatility, ending strong after brutal pullbacks over the previous two sessions. Fannie's shares rose 9% to close at $1.99, following a 28% decline over the previous two days. The shares have risen 665% since the end of 2012, when they closed at 26 cents. Freddie's shares were up 8% to close at $1.89, after a two-day slide of 29%. The shares are up 627% year-to-date, also having closed at 26 cents on Dec. 31. Fannie and Freddie -- known as the government-sponsored enterprises, or GSEs, and holding roughly $5.2 trillion in mortgage loans and mortgage-backed securities. Both firms were taken under government conservatorship in September 2008, but continue their key role by purchasing roughly 90% of newly originated mortgage loans in the United States. The U.S. Treasury holds $117.1 billion in Fannie Mae senior preferred shares and $72.3 billion in Freddie Mac senior preferred shares, for assistance provided to the companies. The GSEs returned to profitability last year and they have paid or announced dividends to the government totaling $131.6 billion. But the companies are not allowed to repurchase any of the government-held preferred shares or consider restoring dividends on junior preferred shares. Long-term investors holding GSE common shares and junior preferred shares expect a political settlement that will allow Fannie and Freddie eventually to repay the government and go on operating, or a dissolution of the GSEs that includes an eventual payout to investors. Bloomberg on Tuesday reported that Senators Bob Corker (R., Tenn.) and Mark Warner (D., Va.) are drafting a bill to dissolve Fannie and Freddie over a period of five years, while having the U.S. Treasury take over the GSEs' mortgage loan guarantees. The GSEs would, in part, be replaced by a new government agency. The draft bill signals a major change of attitude in Washington, as it gives consideration to an eventual recapture of value by non-government shareholders of the GSEs.
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