Freddie Mac Investment Thesis

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. The company purchases single-family and multifamily residential mortgage loans originated by lenders, as well as invests in mortgage loans and mortgage-related securities. It operates through two segments, Single-family and Multifamily. The Single-family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, sale, securitization, and guarantee of multifamily loans and securities through the issuance of multifamily K and SB certificates; issuing and guarantying other securitization products; issuing other credit risk transfer products; and provision of other mortgage-related guarantees. It serves banks and other depository institutions, insurance companies, money managers, central banks, pension funds, state and local governments, real estate investment trusts, brokers and dealers, and a range of lenders. The company was founded in 1970 and is headquartered in McLean, Virginia.

Freddie Mac (FMCC): The Twin Sister

1. Executive Summary

The thesis for Freddie Mac is identical to Fannie Mae (FNMA). They are effectively mirror images, operating as a government-sponsored duopoly. Any regulatory action taken on Fannie will almost certainly apply to Freddie.

Key Thesis Points

Arbitrage: Occasionally, a spread opens up between FNMA and FMCC share prices. Some traders play this ratio, but fundamentally they are the same bet.
Capital Structure: Like Fannie, Freddie has junior preferred shares (trading at ~5-10 cents on the dollar) which might offer higher leverage if a settlement occurs that pays out face value.

2. Recommendation

Treat as an Option: This is not an investment; it is a long-dated call option on US Housing Finance Reform. Position size should be minimal (<1% of portfolio).

3. Risks

Profit Sweep: The "Net Worth Sweep" (NWS) precedent means the government can technically take 100% of profits forever.

Freddie Mac Investment Thesis

Freddie Mac (FMCC): The Twin Sister

1. Executive Summary

Key Thesis Points

2. Recommendation

3. Risks

FMCC Valuation Model

Strategic Assets

FNMA FMCC Deep Dive

FMCC (Federal Home Loan Mortgage Corporation): Riding the Mortgage Wave, but Navigating Choppy Waters

Investment Memo: Fannie Mae (FNMA) & Freddie Mac (FMCC)

idea what s wrong with fannie freddie

idea what s wrong with fannie freddie

FMCC (Federal Home Loan Mortgage Corporation): Riding the Mortgage Wave, but Navigating Choppy Waters