'Big Short' investor Michael Burry warned early about subprime excess — now he's betting on Fannie and Freddie IPOs

Michael Burry, famous for betting against subprime mortgage excesses, disclosed on his Substack that he holds “good size” positions in Fannie Mae and Freddie Mac common stock and believes plans to return them to the public markets may be approaching as both firms have rebuilt tens of billions in capital since 2021 and still back roughly 62% of outstanding U.S. home loans; he cautioned, however, that significant regulatory and policy hurdles remain despite the Trump administration signaling interest in ending conservatorship. The disclosure—which came after he closed Scion Asset Management to outside investors and launched the Cassandra Unchained Substack—coincided with modest OTC gains in the shares (about 2% and 2.4%), and underscores Burry’s view that IPOs would free capital constraints and could accelerate growth if the final policy obstacles are cleared.

Analysis

Michael Burry disclosed on his Substack that he holds "good size" positions in Fannie Mae and Freddie Mac common stock and believes a return to public markets may be approaching; he published a detailed 6,000-word analysis arguing both firms have rebuilt “tens of billions” in capital since 2021 and still back roughly 62% of outstanding U.S. mortgage loans. He contends that IPOs would free the firms from capital restraints and could naturally accelerate growth, positioning them as central pillars of the mortgage market if conservatorship ends. Burry also emphasizes that a "final steep, windy and rocky climb" of regulatory and policy hurdles remains, even as the Trump administration signals interest in ending conservatorship; short-term market reaction was modest, with OTC shares rising about 2% and 2.4% respectively on the day of his post. His public move follows closing his fund to outside investors and launching a widely followed Substack (about 146,000 subscribers), which could amplify investor attention but does not change the core regulatory uncertainty that will drive material valuation inflection points.

Key Decisions for Investors

• Consider modest, tactical exposure to Fannie and Freddie common shares only if you have a high risk tolerance and accept OTC illiquidity and regulatory binary risk
• Monitor concrete policy and regulatory catalysts (FHFA statements, administration decisions, formal IPO filings and capital release metrics) and materially increase exposure only after clear, binding milestones are achieved
• Avoid concentration in these names and use position sizing or hedges to protect against adverse regulatory outcomes and heightened volatility prior to any formal IPO