Famed Bear Michael Burry Is Bullish on Fannie and Freddie

Michael Burry said he holds sizable positions in Fannie Mae and Freddie Mac common stock and is bullish that a relisting of the government-sponsored enterprises is “nearly upon us,” detailing in a 6,000-word blog the political and regulatory changes he deems necessary — easing capital requirements, converting certain preferred shares to common and reducing the government’s claim — warning that without those changes the common stock would be effectively worthless. He noted the offering price will drive intrinsic value and acknowledged a “final steep, windy and rocky climb to IPO,” while the over-the-counter shares have rallied (Fannie +3.9%, Freddie +3.1% on the day and >15% so far this month). Burry said he became constructive after last year’s presidential election, and separately his Scion Asset Management recently terminated its SEC registration, raising questions about his fund’s status.

Analysis

Michael Burry disclosed in a 6,000‑word blog post that he holds sizable positions in Fannie Mae and Freddie Mac common stock and believes a relisting is nearly upon us. He said he turned constructive after last year’s presidential election and outlined that regulators must ease capital requirements, convert certain preferred shares into common stock and scale back the government’s claim before an IPO can succeed; he warned that without reducing the government claim the common shares would be effectively worthless.

Market reaction has been supportive in the near term: Fannie Mae rose 3.9% and Freddie Mac climbed 3.1% on Tuesday, and both have rallied more than 15% so far this month while trading over‑the‑counter and remaining prone to volatile swings. Burry emphasized that the eventual offering price will be a key determinant of intrinsic value and that preferred conversions and capital‑requirement changes will materially affect shareholder outcomes; he also described a final steep, windy and rocky climb to IPO.

Primary risks are political and regulatory rather than fundamental: legislative choices, regulator action on capital rules and the government’s retained claim are binary hurdles to any relisting. Separately, Scion Asset Management’s recent termination of SEC registration introduces uncertainty about Burry’s future role and potential liquidity events, so upside hinges on concrete policy milestones and IPO terms rather than publicity alone.

Key Decisions for Investors

• Consider modest, size‑limited exposure to Fannie and Freddie OTC common shares to capture potential relisting upside given month‑to‑date >15% gains, but cap allocations because regulatory and political outcomes are binary
• Monitor specific catalysts closely: rule changes on capital requirements, announcements about preferred‑to‑common conversions, any formal reduction of the government claim, and disclosed IPO pricing, and reassess positions when those milestones are confirmed
• Employ downside protection or wait for clearer IPO terms and regulatory action before materially increasing exposure, since OTC volatility and the 'steep, windy and rocky' path to IPO create high execution risk
• Do not over‑weight positions based solely on Burry’s endorsement; Scion’s SEC registration termination raises uncertainty about his ongoing engagement and liquidity, so base allocation on verified policy progress and valuation metrics