Keefe sees Fannie, Freddie shares rallying on Trump comment

Keefe Bruyette sees shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) reacting positively to President Trump’s social media post about “giving very serious consideration” to taking the government sponsored entities public. However, “serious hurdles” to privatization exist, including deciding what to do about Treasury’s investment in the companies, recalibrating capital standards to generate double-digit returns on equity, and deciding on the nature of the implicit guaranty, which is crucial to the functioning of the agency mortgage backed security market, the analyst tells investors in a research note.