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In one of the great delayed reactions of recent times, Fannie Mae (FNMA -39%) and Freddie Mac (FMCC -36.4%) plunge in wake of the introduction of a bipartisan Senate bill calling for their wind-down. Like Wile E. Coyote after running off the edge of a cliff, the stocks hung around in positive territory for a couple of hours after the news hit ... then they looked down.
Wonder if BB is buying more. By the way has he ever admitted he was wrong (which he really was) and sold? EVER? I don't recall him doing that.
I believe he's largely out of St Joe, last I looked.
As for Fannie/Freddie, my philosophy is that the government is going to do what the government believes is in its best interest, whether that makes sense to investors or not. Additionally, it is going to do what looks good to voters and a large portion of the population is probably not going to be bothered by wealthy hedge funds/fund managers being screwed over. Again, whether you think it's right or wrong, I just see investors not at the head of the line in this case. I hope for those invested in this with Fairholme and otherwise I'm wrong, but again, I just think the government is going to do what the government thinks is best for it.
If investors don't get their way they're going to sue the government, then? Good luck with that.
I think he had a large-ish position in PFE that he sold (thesis, large, deep-pockets pharma to become "Merchants of Venice"), and later admitted he was wrong about. Think he did the same with an aerospace/defense name.
But on financials he has bet heavily. I keep FAIRX at 5% of portfolio.
BB is not betting on the government's good will toward investors, but on the courts' interpreting the law in investors' favor. I'd need to be a lawyer to bet on that one, but I am, for better or worse, betting that BB got some top lawyers' opinions before making his bet.
Comments
Of course, it's had an amazing resurrection this past year.
And I suspect it is far from over.
Regards,
Ted
Regards,
Ted
As for Fannie/Freddie, my philosophy is that the government is going to do what the government believes is in its best interest, whether that makes sense to investors or not. Additionally, it is going to do what looks good to voters and a large portion of the population is probably not going to be bothered by wealthy hedge funds/fund managers being screwed over. Again, whether you think it's right or wrong, I just see investors not at the head of the line in this case. I hope for those invested in this with Fairholme and otherwise I'm wrong, but again, I just think the government is going to do what the government thinks is best for it.
If investors don't get their way they're going to sue the government, then? Good luck with that.
But on financials he has bet heavily. I keep FAIRX at 5% of portfolio.