Earlier in October, Burry sold his Fannie and Freddie common shares and bought junior preferred shares.

  • Fannie Mae closed up roughly 9%, and Freddie Mac gained about 8% on Tuesday after Michael Burry called recent court and policy developments “good news.”
  • Treasury Secretary Scott Bessent said on Tuesday that the administration expects to address Fannie and Freddie’s ownership structure next year or the year after, with the priority of not widening mortgage spreads.
  • Fannie and Freddie have remained under government conservatorship since the 2008 financial crisis.


‘The Big Short’ investor Michael Burry on Tuesday highlighted recent court wins for Fannie and Freddie shareholders and comments from Treasury Secretary Scott Bessent about eventually resolving the companies’ ownership structure as ‘good news’ for the two firms.

Fannie Mae (FNMA) closed up roughly 9%, while Freddie Mac (FMCC) posted 8% gains. The moves came as Burry pointed to two developments he described as positive for the government-sponsored enterprises that dominate the U.S. mortgage market.

Court Affirms Big Shareholder Award

In July, the U.S. Court of Appeals for the D.C. Circuit upheld a jury verdict favoring Fannie and Freddie shareholders. The appeals court affirmed a judgment of about $812 million, including interest, against the Federal Housing Finance Agency. Shareholders had argued that the 2012 “net worth sweep,” which directed the companies’ profits to the Treasury, violated their rights. The appellate ruling rejected the government’s key arguments and preserved the trial win.

Earlier this month, the U.S. Court of Appeals for the D.C. Circuit declined the Federal Housing Finance Agency’s request for a full-court rehearing, leaving in place the July decision.

Bessent Signals Ownership Review Ahead

Burry also flagged recent remarks from Bessent. The Treasury secretary said in an interview with 2WAY media platform earlier on Tuesday that the administration expects to address the ownership structure of Fannie and Freddie next year or the year after. He stressed that any steps would be guided by a clear priority: keeping the spread between agency mortgage rates and Treasury yields from widening, so that borrowing costs for homebuyers do not rise.

Fannie and Freddie have remained under government conservatorship since the 2008 financial crisis.

Burry’s Recent Trade On The Stocks

Earlier in October, Burry said he had sold his common shares of Fannie and Freddie after the stocks erased nearly all their post-election gains and formed a large head-and-shoulders chart pattern that, in his view, pointed toward “worthless stock.” He simultaneously bought several series of the companies’ junior preferred shares. He argued that the preferreds sit higher in the capital structure and would fare better than common stock if the Treasury converts its roughly $388 billion senior preferred claim into common equity—an outcome he said could dilute existing common shareholders by at least 90%.

How Did FNMA, FMCC Retail Traders React?

On Stocktwits, retail sentiment around FMCC and FNMA was in 'extremely bullish' territory at the time of writing, coupled with 'high' message volume.

While FNMA has dropped 65% year-to-date, FMCC has dropped 67%. 

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