Renowned investor Michael Burry has shifted his position on U.S. government-sponsored enterprises, announcing a bullish outlook on Fannie Mae and Freddie Mac. The move marks a notable reversal from his past skepticism of the housing finance system.
- Michael Burry disclosed holdings of over 5 million shares each in Fannie Mae (FNMA) and Freddie Mac (FMCC)
- Average purchase price: $11.20 for FNMA, $10.80 for FMCC
- Positions established in Q4 2024, reflecting undervaluation relative to historical book value
- Market context includes expected Fed rate cuts in early 2025 and housing market stabilization
- GSEs back over $5 trillion in mortgages, making them central to U.S. housing finance
- Burry’s shift signals a reversal from prior skepticism of the mortgage finance system
Michael Burry, the investor famous for predicting the 2008 housing crash, has disclosed a new long position in Fannie Mae (FNMA) and Freddie Mac (FMCC), signaling a strategic pivot in his investment strategy. In a recent regulatory filing, Burry’s investment vehicle disclosed holdings of over 5 million shares in each entity, representing a significant stake in both mortgage giants. The shift underscores a growing belief that the current economic environment—marked by elevated interest rates and housing market stabilization—has created favorable conditions for these institutions to generate strong returns. The positions were established in the fourth quarter of 2024, with Burry's fund purchasing shares at an average price of approximately $11.20 per share for Fannie Mae and $10.80 for Freddie Mac. These valuations, below their historical book value and current government support levels, suggest Burry sees substantial undervaluation. His entry comes amid expectations of a gradual decline in mortgage rates in 2025, which could boost housing demand and improve the performance of the mortgage-backed securities these firms underwrite. Market analysts note that Burry’s move may influence other institutional investors to reassess the risk-reward profile of GSEs. Fannie Mae and Freddie Mac remain central to the U.S. housing market, guaranteeing over $5 trillion in mortgages. Their financial health is closely tied to Treasury yields and broader macroeconomic stability. With the Federal Reserve signaling potential rate cuts in early 2025, the tailwinds for mortgage finance entities could intensify. The shift also raises questions about Burry’s long-term outlook on the U.S. housing sector. After years of caution, his renewed confidence in the GSEs reflects a broader recalibration of risk, especially in fixed-income and mortgage-related assets. Investors are watching closely to see if this move triggers a broader repositioning in the financial sector.