Freddie Mac-No Politics (FMCC)

[navycmdr]

$Booooom ! - Fannie And Freddie: My Favorite Trump Stocks

Jul. 03, 2024 10:00 AM ET - Chris DeMuth Jr. - Investing Group Leader

https://seekingalpha.com/article/4702129-fannie-and-freddie-my-favorite-trump-stocks?source=section%3Asummary%7Csection_asset%3Aall_analysis%7Cfirst_level_url%3Asymbol%7Cbutton%3ATitle%7Clock_status%3ANo%7Cline%3A1



.......... Summary ..........

--- Want a way to bet on Trump? There are bad choices but also good ones.

--- Here is my favorite way to bet on Trump at scale.

--- The major caveat is the likelihood of Democrats switching candidates.

--- But even with this risk, these securities remain undervalued.

--- I am Chris DeMuth Jr. I founded and run event driven hedge fund Rangeley Capital LLC,
a hedge fund specializing in value, arbitrage and event driven opportunities. I lead the investing
group Sifting the World which provides arbitrage and event driven ideas for long-term value investors.

Earlier this year, I wrote about several ways to get exposure to a possible second Trump term,
including Trump NFTs, Rumble (RUM, RUMBW), and Trump Media & Technology Group Corp. (DJT).
I disliked them all, especially DJT (DWAC at the time).

My views are unchanged since then. But I also mentioned a leveraged bet on Trump that I own and love:

There is a possibility that we see both the end of the Chevron Doctrine deferring to regulators at the
Supreme Court at around the same time as the end of the Biden administration. So, companies that
have suffered under aggressive regulatory burdens could flourish. One of the most leveraged bets
on Trump is Fannie (OTCQB:FNMA, OTCQB:FNMAS, OTCQB:FNMAT) and Freddie (OTCQB:FMCC,
OTCQB:FMCKJ, OTCQB:FMCCH); they've suffered under Biden but could have a route to realizing
value under Trump. Their prefs have more ways to win than common.

The Chevron Doctrine deferring to regulators was killed off by the Supreme Court today. But will Trump win?
Probably. I place the odds at least two out of three.

Will Donald Trump Win?
Betting markets have been remarkably stable until today’s volatility.



Poll averages show Trump ahead by about 2%, but I expect that margin to widen from here:



However, Biden’s problems are worse on a state-by-state basis. He is struggling
in sunbelt states such as Arizona, Nevada, and Georgia. That means he would
have to sweep the rust belt states of Wisconsin, Michigan, and Pennsylvania.



And then there was Biden’s debate disaster. It utterly validated special counsel
Robert Hur’s description of the president,

We have also considered that, at trial, Mr. Biden would likely present himself to
a jury, as he did during our interview of him, as a sympathetic, well-meaning,
elderly man with a poor memory. It would be difficult to convince a jury that they
should convict him—by then a former president well into his eighties—of a
serious felony that requires a mental state of willfulness.

Last night, he came across as every bit an elderly man with poor memory, incapable of a
mental state of willfulness. His handlers have been saying for months that he is spry and
alert away from the microphone. They have been lying.

Now what? Most likely: Biden loses and Trump wins. Biden’s weaknesses are difficult to
message. You are overtaxed? That isn’t a hypothetical concern that someone can explain
away. You see inflation at the grocery store? “No, you don’t” is hardly a convincing counterpoint. Y
ou were lied to about Biden’s fitness. A greater quantity of lies won’t improve their quality.

But this is a competitive system, and Democrats won’t go down with Biden if his loss looks
as likely as I think it is. California Governor Gavin Newsom was all over the post-debate spin
cycle, looking more in sadness than anger at the debacle, but also looking very presidential.
The Democrats could find a consensus alternative among the competent Democratic governors
such as Colorado Gov. Jared Polis or Pennsylvania Gov. Josh Shapiro (the Republicans are
more committed to Trump but could also switch out for a far more electable gov such as Georgia’s
Brian Kemp or Virginia’s Glenn Youngkin). An irony of this year’s political dynamics is that Biden
is the Republican’s not so secret weapon and Trump is the Democrats’. Any normal candidate
would obliterate the other party’s presumptive nominee in the electoral college.

A serious delegation, say, led by Pres. Clinton and Pres. Obama, could approach Biden
to step aside. If he balks, a compromise could be to replace the unpopular Vice President
with a consensus candidate, paired with a plan for Biden to step down shortly after a victory.
That could appease Biden’s ego and transition to a more sentient leader of the free world.

Caveat

Trump could lose or fail to privatize Freddie and Fannie if he wins. The chance radically
rises if the Democrats switch out Biden for a more electable nominee.

Conclusion

Trump has at least a two out of three chances of winning this election. If he does, he will probably
enrich Freddie and Fannie pref holders by privatization. And whether he does, the likelihood will
get meaningfully priced in if he gets elected.

TL; DR

I own some (FNMAS), (FNMAT), (FMCKJ), and (FMCCH); you might want to too.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Like underpaying for bargains?
Here's one more.

This article was written by - Chris DeMuth Jr. - 37.66K Followers

Chris DeMuth Jr., is founder of event driven hedge fund Rangeley Capital. Its strategy is to invest in mispriced securities with limited downsides and corporate events that unlock shareholder value. Rangeley exploits the seams between other hedge funds’ mandates.

Chris runs the investing group Sifting the World, in which he shares his best ideas, deep research, extensive resources and real time updates as investments play out. The group contains an experienced community that shares specialized knowledge when members have local knowledge of opportunities under discussion. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of OTCQB:FNMAS, OTCQB:FNMAT, OTCQB:FMCKJ, AND OTCQB:FMCCH either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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