Fannie, Freddie preferreds stalled by OTC trading halt; Wachovia calls 7.25% preferreds

By Stephanie N. Rotondo

Phoenix, Nov. 7 - Preferred stocks were again gaining on Thursday, but halted trading on the OTC markets took some of the wind out of Fannie Mae and Freddie Mac's sails.

Both agencies reported hefty profits on Thursday and, in turn, large dividend payouts to taxpayers. A trader said he thought the preferreds would be popping on that news, but the exchange made that difficult to tell.

At 11:25 a.m. ET, Finra stepped in and officially halted trading, which had already been down all morning due to what Saskia Sidenfaden, director of corporate communications, called "connectivity issues." The problem did get fixed, but the market didn't reopen until 3 p.m. ET, leaving little time for investors to get their trades in.

That being said, the preferreds were stronger once they actually started trading.

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) ended up 25 cents, or 3.13%, at $8.25, and Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) rose a dime, or 1.23%, to $8.20.

Fannie reported net income of $8.7 billion, and Freddie posted income of $30.5 billion.

For its part, Freddie's huge profit was due to writing up almost $24 billion in tax-related assets.

The massive profits at both agencies meantime also signaled that taxpayers were ever closer to getting their money back after bailing out the firms in 2008.

Freddie is planning to make a $30.4 billion payment in December, which will be an overpayment of about $9 billion. Fannie is making an $8.6 billion payment, which will leave it with about $2.2 billion to pay back to taxpayers.

Wachovia calls preferreds

Wachovia Preferred Funding Corp. - an entity owned by Wells Fargo & Co. since 2008 - said it was redeeming all of its 7.25% series A noncumulative exchangeable preferred securities on Jan. 2.

On the news, the issue (NYSE: WNAP) moved up 2 cents to $25.41 and was among the day's most actively traded issues.

Over 330,000 shares traded during the session.

The preferreds will be called at par plus accrued dividends.

National Retail rises

National Retail Properties Inc.'s 5.7% series E cumulative redeemable preferred stock was moving higher on Thursday, just two days after the company reported stronger third-quarter earnings.

The shares (NYSE: NNNPE) gained a dime, ending at $19.96.

On Tuesday, the Orlando-based real estate investment trust reported a 19.8% increase in revenues at $100.6 million. Net profit was $34.8 million, or 29 cents per share, which compared to $33.3 million, or 30 cents per share, the year before.

The lower earnings per share was due to the company's issuance of an additional 158,280 shares of common stock. That issuance brought in proceeds of $5.2 million.

Adjusted funds from operations were $60.9 million versus $51.3 million a year ago.

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