By Dhirendra Tripathi
Investing.com – Shares in Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) have struggled to show any sign of a bounce in premarket on Thursday, a day after having their value slashed by a Supreme Court ruling that effectively ruled out their privatization in the foreseeable future.
Odeon Capital analyst Dick Bove was just one analyst to suspend his ratings on the two mortgage agencies after the Supreme Court Wednesday handed the U.S. President the authority to fire the head of the Federal Housing Finance Agency, which oversees them.
Bove said the suspension will be in place under he studies the order.
FHFA Director Mark Calabria quit in the wake of the Court order and the FHFA said the White House had named Sandra Thompson as its acting director. President Joe Biden has indicated that he intends to keep the agencies under federal control, in contrast to his predecessor.
Fannie and Freddie shares had both plunged more than 32%, the biggest one-day slide for the companies since February 2017. The bleeding was even worse for various share classes of preferred stock owned by major hedge funds, triggering losses that in some cases exceeded 60%, according to Bloomberg.
Fannie and Freddie shareholders Patrick Collins, Marcus Liotta and William Hitchcock had sued the FHFA and the Treasury Department in Texas in 2016 in an attempt to ensure that any profits made by the agencies went to shareholders, a move resisted by the FHFA.