Fannie Mae-No Politics (FNMA)

[10bambam]

Just In: Ciena Corporation (NYSE:CIEN), Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA)
Joining the ranks of hedge fund managers Bruce Berkowitz and Bill Ackman, activist investor Carl Icahn has bought a $50 million stake in Federal National Mortgage Assctn Fnni Me(OTCBB:FNMA) and Freddie Mac (NASDAQOTCBB: FMCC ) .

While it’s definitely exciting to see what companies the “whales” are jumping into, it’s always important to take a closer look to see if it makes sense for you before considering it for your own portfolio. Why did Icahn jump in and what’s his goal here? And what can you learn from it?

In mid-May, it was announced that Berkowitz’s Fairholme Capital had cut its stake in Fannie and Freddie, and we just recently discovered that Icahn was the buyer. Fairholme sold 6.8 million shares of Fannie (exactly how many Icahn bought) and 2.2 million shares of Freddie in the first quarter, bringing its total stake down to 19.2 million shares of Fannie and 17.2 million of Freddie.

Berkowitz’s reasons for doing this are not too tough to figure out. First, by selling the shares, he’s locking in gains. The share price of both companies has more than doubled since Berkowitz bought in, and even though he seems reasonably confident in the future profitability of both investments, there’s nothing wrong with taking some profits on the table.

Icahn, on the other hand, is more than likely looking at this as a speculative investment and nothing more. A $50 million stake is small potatoes for Icahn, whose investments typically are in the billions, like his stakes in Apple and Herbalife. So, Icahn is probably looking at Fannie and Freddie as a potential home run, and is probably willing to throw his weight around a little to help the cause, but is not willing to risk too much of his money.

http://www.marketnewscall.com/just-in-ciena-corporation-nysecien-federal-national-mortgage-assctn-fnni-me-otcbbfnma/1226792/