Fannie Mae and Freddie Mac fell in New York trading after Merrill Lynch & Co. analysts said the housing and debt market slumps will stifle earnings at the mortgage-finance companies through 2011.No word yet from Barney Frank(Democrat-Fannie Mae).
Fannie Mae, the largest source of money for U.S. home loans, declined 27 cents to $28.72 in New York Stock Exchange trading today after the Merrill analysts said investors should sell their shares in both companies. Freddie Mac, the second-largest provider, fell $1.14, or 4.1 percent, to $26.61.
The companies, which own or guarantee about 45 percent of the $11.5 trillion in U.S. residential mortgages outstanding, may need to raise more money to cope with loan defaults, the analysts wrote in a report today. Fannie Mae and Freddie Mac reported $3.4 billion in combined third-quarter losses and are expected next week to report similar results for the fourth-quarter.
``We do not think the stocks fully reflect the severity or duration of the financial headwinds facing the companies,'' Merrill analysts including Kenneth Bruce in San Francisco wrote in a note to clients, cutting their recommendation to ``sell'' from ``neutral.'' There is ``more pain than gain,'' they wrote.
Saturday, February 23, 2008
Fannie Mae, Freddie Fall After Merrill Says `Sell'
Bloomberg reports:
