Tuesday, July 18, 2017

Freddie Mac Stock: Why Warren Buffett Sold His Shares



Freddie Mac Stock: Why Warren Buffett Sold His Shares
Fannie Mae and Freddie Mac grab headlines, and Warren Buffett has reveled why he sold his position that was once worth $3.9 billion.
Warren Buffett and President Barack Obama
Patrick Morris
(TMFMorris) 
Jul 25, 2014 at 2:11PM
Think you've heard everything about Fannie Mae (NASDAQOTH:FNMA) and Freddie Mac (NASDAQOTH:FMCC)? Wait until you here why Warren Buffett unloaded the Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) stake that was once worth nearly $4 billion.

The continual push
In recent years many big name investors -- including Bruce Berkowitz, Carl Icahn, and Bill Ackman -- with billions at their disposal have weighed in on what they believe the government should do with Fannie Mae and Freddie Mac. After all, the companies still sit in limbo as they are controlled by the Federal Housing Finance Agency and return every dime they earn back to the Treasury.

But this isn't a secret. The first sentence of the annual report of Fannie Mae reads:

We have been under conservatorship, with the Federal Housing Finance Agency ("FHFA") acting as conservator, since September 6, 2008. As conservator, FHFA succeeded to all rights, titles, powers and privileges of the company, and of any shareholder, officer or director of the company with respect to the company and its assets.

Yet many are still willing to fight for it and suggest change is coming and the best days are ahead for the two government sponsored entities.

The massive position
With all that in mind, it's natural to wonder what Buffett thinks. And while he's given us the answer for how he feels about Fannie and
Freddie currently, as shown in the video below, Buffett has also discussed why he unloaded his stake in Freddie Mac nearly 15 years ago.

At one point he owned nearly 9% of it, and by 1998, his position had climbed to have a market value of $3.9 billion, representing a return of almost 1200%:
Source: Company investor relations.

But as you can see, that position came to abrupt end, as he noted bluntly in his letter, "in 2000, we sold nearly all of our Freddie Mac and Fannie Mae shares."

So why did he do it? Freddie Mac became too focused on quarterly results, took on too much risk, and more. When he saw these things he noted, "I figure if you see just one cockroach, there's probably a lot."

The lesson learned here extends well beyond Fannie and Freddie, revealing investors must always be aware of those things both great and small at the companies they invest in, as a small sign of trouble can be just the tip of the iceberg.

Yet as it relates to Fannie and Freddie, Buffett notes they were trying to serve the mandates of Congress and the demands of Wall Street, and "that's a tough balancing act." Undeniably that balancing act has ended and now leans exclusive to the side of the government.

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Freddie Mac
Anthony A. Williams is a director at Freddie Mac, and a trustee at the Urban Institute (think tank).

Note: Foundation to Promote Open Society was a funder for the Urban Institute (think tank), the Carnegie Endowment for International Peace (think tank), and the Brookings Institution (think tank).
George Soros was the chairman for the Foundation to Promote Open Society, is the founder & chairman for the Open Society Foundations, and a friend of Michael Douglas.
Open Society Foundations was a funder for the Carnegie Endowment for International Peace (think tank).
Jamie S. Gorelick is the chairman for the Urban Institute (think tank), was the vice chair for Fannie Mae, and a trustee at the Carnegie Endowment for International Peace (think tank).
Warren E. Buffett is a life trustee at the Urban Institute (think tank), the chairman & CEO for Berkshire Hathaway Inc., an adviser for the Nuclear Threat Initiative (think tank), and a friend Byron D. Trott.
Michael Douglas is a director at the Nuclear Threat Initiative (think tank), and a friend of George Soros.
Carnegie Endowment for International Peace (think tank) was a funder for the Nuclear Threat Initiative (think tank).  
Jessica Tuchman Mathews is a director at the Nuclear Threat Initiative (think tank), was the president of the Carnegie Endowment for International Peace (think tank), a director at the American Friends of Bilderberg (think tank), an honorary trustee at the Brookings Institution (think tank), and a 2008 Bilderberg conference participant (think tank).
Ed Griffin’s interview with Norman Dodd in 1982
(The investigation into the Carnegie Endowment for International Peace uncovered the plans for population control by involving the United States in war)
Byron D. Trott is a friend of Warren E. Buffett, and a member of the Commercial Club of Chicago.
Commercial Club of Chicago, Members Directory A-Z (Past Research)
Tuesday, December 17, 2013
R. Eden Martin is the president of the Commercial Club of Chicago, and counsel at Sidley Austin LLP.
Michelle Obama was a lawyer at Sidley Austin LLP.   
Barack Obama was an intern at Sidley Austin LLP, and the president for the Barack Obama administration.      
Newton N. Minow is a senior counsel at Sidley Austin LLP, and a member of the Commercial Club of Chicago.
Rahm I. Emanuel is a member of the Commercial Club of Chicago, the Chicago (IL) mayor, was the White House chief of staff for the Barack Obama administration, and a director at Freddie Mac.
Anthony A. Williams is a director at Freddie Mac, and a trustee at the Urban Institute (think tank).
Warren E. Buffett is a life trustee at the Urban Institute (think tank), the chairman & CEO for Berkshire Hathaway Inc., an adviser for the Nuclear Threat Initiative (think tank), and a friend Byron D. Trott.
Jamie S. Gorelick is the chairman for the Urban Institute (think tank), a partner at Wilmer Cutler Pickering Hale and Dorr, was the vice chair for Fannie Mae, and a trustee at the Carnegie Endowment for International Peace (think tank).
Cameron F. Kerry was an associate at Wilmer Cutler Pickering Hale and Dorr, is a partner at Sidley Austin LLP, John F. Kerry’s brother, and a fellow at the Brookings Institution (think tank).
Michelle Obama was a lawyer at Sidley Austin LLP.   
Barack Obama was an intern at Sidley Austin LLP.
John F. Kerry is Cameron F. Kerry’s brother, and married to Teresa Heinz Kerry.
Teresa Heinz Kerry is married to John F. Kerry, an honorary trustee at the Brookings Institution (think tank), an emeritus life trustee at the Carnegie Mellon University, and the chair for the Heinz Endowments.
Frank V. Cahouet is an emeritus life trustee at the Carnegie Mellon University, was a director at the Heinz Endowments, and the president & COO for Fannie Mae.
Heinz Endowments was a funder for the Brookings Institution (think tank).
Thomas E. Donilon was a trustee at the Brookings Institution (think tank), a director at the American Friends of Bilderberg (think tank), a lobbyist & EVP for Fannie Mae, and a 2008 Bilderberg conference participant (think tank).
Cyrus F. Freidheim Jr. is an honorary trustee at the Brookings Institution (think tank), and a member of the Commercial Club of Chicago.
Rahm I. Emanuel is a member of the Commercial Club of Chicago, the Chicago (IL) mayor, was the White House chief of staff for the Barack Obama administration, and a director at Freddie Mac.
Anthony A. Williams is a director at Freddie Mac, and a trustee at the Urban Institute (think tank).
Warren E. Buffett is a life trustee at the Urban Institute (think tank), the chairman & CEO for Berkshire Hathaway Inc., an adviser for the Nuclear Threat Initiative (think tank), and a friend Byron D. Trott.
Byron D. Trott is a friend of Warren E. Buffett, and a member of the Commercial Club of Chicago.
Commercial Club of Chicago, Members Directory A-Z (Past Research)
Tuesday, December 17, 2013
R. Eden Martin is the president of the Commercial Club of Chicago, and counsel at Sidley Austin LLP.
Michelle Obama was a lawyer at Sidley Austin LLP.   
Barack Obama was an intern at Sidley Austin LLP, and the president for the Barack Obama administration.      
Newton N. Minow is a senior counsel at Sidley Austin LLP, and a member of the Commercial Club of Chicago.
Rahm I. Emanuel is a member of the Commercial Club of Chicago, the Chicago (IL) mayor, was the White House chief of staff for the Barack Obama administration, and a director at Freddie Mac.
Anthony A. Williams is a director at Freddie Mac, and a trustee at the Urban Institute (think tank).

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