Morning Commentary: Fannie Mae, Freddie Mac push up as Ackman bullish and lawsuit questioned

By Stephanie N. Rotondo

Phoenix, Feb. 17 – Fannie Mae and Freddie Mac preferreds were taking focus in early Tuesday trading, a trader reported, following a round of news items through the long weekend.

On Friday, activist investor Bill Ackman made some bullish comments about the government-sponsored entities. On Saturday, the New York Times followed up with a piece about a shareholder lawsuit against the government in regards to a takeover of the agencies’ profits. According to the article, the Justice Department has asserted presidential privilege on at least 45 documents – raising questions about what those documents contain.

The article further alleged that the government’s use of privilege was nothing more than an attempt to hide something.

“Shocking,” a trader said, noting that the news had pushed up the two mortgage giants’ $50-par preferreds up about 60 cents to 70 cents and the $25-par paper up 35 cents.

Overall, the preferred space was looking to climb higher in early trading as the Wells Fargo Hybrid and Preferred Securities index inched up 3 basis points by mid-morning.

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