Cult shortseller Burry disclosed stakes in mortgage giants Fannie Mae and Freddie Mac

American financier Michael Burry, whose play against the real estate market formed the basis of the plot of the movie "The Downgrade Game", reported owning large positions in Fannie Mae and Freddie Mac. The investor, who was one of the first to predict the 2007 U.S. mortgage crisis, is now betting on the mortgage giants' stocks to rise once they return to the stock market.

Burry said he expects the IPO price of Fannie Mae and Freddie Mac to be in the 1-1.25 range of their book value, with their shares likely to trade at a higher multiple of 1.5-2 within a year or two after listing. "Once each of these companies are freed from capital constraints through IPOs, I expect a natural acceleration in growth," he wrote in the paid newsletter Cassandra Unchained, which Oninvest has access to.

The financier said he began betting on the growth of Fannie Mae and Freddie Mac stock after Donald Trump won the presidential election at the end of 2024. "I personally own common stock in both Fannie Mae and Freddie Mac in significant amounts," he said.

Burry added that he would not be surprised if Warren Buffett's Berkshire Hathaway acquired a significant stake in any of the IPOs of these two U.S. mortgage servicers. The "Oracle of Omaha" investment firm has previously invested in companies in the mortgage sector and owned a stake in Fannie Mae, which it later sold. Fannie Mae and Freddie Mac remain critical to the U.S. residential real estate sector - these state-owned enterprises act as market makers for 70% of the standard mortgage market, Burry emphasized.

Shares of Fannie Mae on the over-the-counter market jumped by 2%. The securities of Freddie Mac added 2.4% in price. Over the past year, their quotations quadrupled.

The U.S. government bought out Fannie Mae and Freddie Mac during the 2008-2009 financial crisis. The Trump administration is considering an IPO of the mortgage giants as early as late 2025, William Pulte, director of the U.S. Federal Housing Finance Agency (FHFA), wrote in October. In early December, Commerce Secretary Howard Lutnick said the White House was "making serious progress on a deal." According to Reuters sources, combining Fannie Mae and Freddie Mac into a single company for listing is not being considered because it would require congressional approval.

American billionaire investor Bill Ackman, whose fund holds positions in both companies, in November called the IPOs of Fannie Mae and Freddie Mac "impractical and undesirable". Instead of an initial public offering of U.S. government-owned shares, Fannie Mae and Freddie Mac securities, which already trade on the over-the-counter market, should simply be transferred to the New York Stock Exchange, Eckman suggested. By his estimation, this process could take several weeks and would provide the companies' combined capitalization of about $400 billion.

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