Fannie, Freddie shares mimic meme-stock mania with wild swings

Bill Ackman and FHFA head Bill Pulte helped fuel a retail-driven rally in Fannie Mae and Freddie Mac—whose shares have risen more than 500% (about six-fold) since Donald Trump’s election—on hopes the administration will privatize the mortgage giants. That froth reversed this week as a crypto rout and broader market volatility, which Ackman and some Wall Street strategists say produced margin calls and forced liquidations, sent the pair down more than 10% on Thursday and lower on Friday, highlighting how leveraged crypto exposure in the shareholder base can transmit to equity selling. The episode underscores the fragility of a social-media-driven, OTC-constrained trade—prone to chunky moves—and leaves the privatization thesis uncertain given Ackman’s own warning that any government unwind will take significant time.

Analysis

Bill Ackman and FHFA head Bill Pulte materially helped drive a retail-led rally in Fannie Mae and Freddie Mac, with shares up more than 500% (roughly six-fold) since Donald Trump’s election on hopes the administration will privatize the mortgage giants. The trade has been amplified by social-media promotion from Pulte and public advocacy from Ackman, creating a concentrated, retail-heavy shareholder base that is attentive to online signals.

The stocks suffered a sharp reversal this week, falling more than 10% on Thursday and continuing lower on Friday as crypto markets plunged and Bitcoin approached its worst monthly performance since the 2022 collapse, which Ackman and some strategists say triggered margin calls and forced selling by leveraged crypto holders. Nomura’s cross-asset strategist and Ackman both cited liquidation flow transmission from crypto to high‑beta equity themes as a proximate cause of the move.

Structural factors heighten risk: both names trade over the counter since their 2010 NYSE delisting, constraining liquidity and making two-standard-deviation moves (≈±10%) commonplace versus ~2% for McDonald’s and ~3% for Microsoft. The privatization thesis remains directional but uncertain — Ackman himself warns a deliberate government unwind will take significant time — leaving policy timing and liquidity the primary near-term drivers.

Investors should treat recent volatility as evidence that retail/crypto contagion and thin OTC market structure, rather than fundamentals or an imminent policy change, are the dominant risk factors for these equities.

Key Decisions for Investors

• Reduce outright directional exposure or hedge existing long positions with put options or short-dated protection given the demonstrated >10% single-session moves and OTC liquidity constraints
• Monitor crypto margin indicators and Bitcoin price action as potential leading signals for renewed forced selling, and follow Pulte/Ackman social posts plus any FHFA or White House statements for timing cues
• Avoid initiating large buy-and-hold positions predicated solely on privatization hopes until the administration provides concrete policy specifics and a credible timeline
• If trading the names, use limit orders, smaller lot sizes, and staggered entries to manage slippage and volatility, and consider sizing positions as tactical rather than strategic