Midday Commentary: End-of-week session sees firm tone; Pershing takes stake in Fannie, Freddie

By Stephanie N. Rotondo

Phoenix, Nov. 15 - Preferred stocks were edging up a touch in early Friday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 1 basis point.

A trader said he was expecting more movements in Fannie Mae and Freddie Mac preferreds after it was reported that Bill Ackman's Pershing Square Capital Management had taken large stakes in the agencies' common stock.

"But they're not really moving around," he said.

A couple of the issues were on the liquid side, but trading was mixed.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were down 8 cents to $8.82 in early trading. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 11 cents, or 1.27%, at $8.79.

Pershing disclosed on Friday that it had bought over 115 million common shares of Fannie and over 63.5 million shares of Freddie.

The Pershing news comes amid reports that a private investor group led by Fairholme Capital Management LLC has put together a proposal to take the agencies' mortgage-backed securities insurance units private.

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