Icahn Buys Fannie Mae, Freddie Mac Shares From Fairholme

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Icahn Buys Fannie Mae, Freddie Mac Shares From Fairholme
Image source: CNBC Video Screenshot

Legendary investor Carl Icahn is the latest member to join the GSE ownership club. According to an article published in the Wall Street Journal on Tuesday, June 3rd, Carl Icahn purchased about $50 million of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) common stock from Bruce Berkowitz’s Fairholme Fund back in March.

It should be noted that the U.S. Treasury owns unexercised warrants representing almost 80% of the common stock of both GSEs.

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Information from court disclosures

The WSJ derived the information on Icahn’s purchase of the Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shares by studying court filings. The court disclosures regarding Icahn’s purchase from Fairholme came as a part of the filings in a lawsuit Berkowitz undertook last year against the federal government related to the handling of the GSEs.

Icahn’s new positions in Fannie and Freddie

According to the court documents recently reviewed by the WSJ, Icahn paid $4.03 a share for his 6.8 million share stake in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), for a total of $27.5 million, and $4.04 a share for his Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shares, for a total of $23.2 million. Based on these figures, Icahn now owns about 0.6% of the total Fannie shares outstanding, and 0.9% of the total Freddie shares.

However, at this point it isn’t clear if Icahn is still holding the GSE shares. No SEC disclosures have been required to date, and the WSJ could not reach him for comment Tuesday.

Icahn’s timing was certainly good. His purchases of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) occurred on March 11, when Fannie’s common stock plummeted 31% and Freddie’s tumbled 27% on news that Senate Banking Committee leaders had reached tentative agreement on a bill to wind down the high-profile mortgage guarantors.

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