💰 5 Fact Friday: Fannie, Freddie, and the Privatization Play

COMMUNITY
1. Share Your 2025 Predictions 🎯

This year is shaping up to be full of big questions:

• Will gold cross $3,000?

• Is a recession around the corner?

• How many Fed rate cuts are coming?

• Will small-cap stocks finally have their moment?

And we want your take!

It only takes 2–3 minutes to complete our multiple choice survey, but the bragging rights for nailing it? Those last forever.

We’ll revisit these forecasts throughout the year—and shoutout our most accurate predictors. Don’t miss your chance to be the Money Maniac to beat in 2025!

OUR PARTNER: THE OXFORD CLUB

The NEXT Trillion Dollar Company?

This company just signed a MASSIVE deal with Apple.

It gets their AI tech in Apple’s iPhones and iMacs until 2040!

But it goes beyond that.

The company is getting its tech into products by Nvidia, Google, and Samsung too.

Its AI tech is so crucial…

Nvidia is actually buying up the stock too.

They’ve invested more in this one company than any other… nearly $150 million.

Is this stock the next Nvidia… which has gone up 81,700% over the last 20 years?

Watch this breakdown of this stock right here.

REAL ESTATE
2. No Hope For A Housing Boom ❌

The U.S. housing market feels like a game of freeze tag gone wrong—stalled by high mortgage rates and ballooning costs for buyers.

Interest rate cuts were supposed to bring long-awaited relief, but with the Fed signaling fewer—or no—cuts in 2025, mortgage rates are stuck just below 7%.

So, hopes of a 2025 real estate recovery? Dashed. Instead, cautious optimism points to a slow and uneven thaw.

According to the National Association of Realtors (NAR), 2024 logged the fewest existing-home sales in three decades. In 2025, Realtor.com expects a modest 1.5% increase, leaving sales 23% below pre-pandemic levels despite ~7% population growth.

What’s holding the market back?

1. Mortgage Rates: Rates are projected to settle between 6.3–6.5% in 2025. Surveys show that many buyers won’t pull the trigger until rates dip closer to 5.5%, which looks unlikely in the near term.

2. Affordability Crunch: Home prices are up 30% from pre-COVID levels, far outpacing income growth. Plus, rising insurance and property taxes aren’t helping.

3. Locked-In Sellers: Nearly 60% of mortgages carry sub-4% rates, making the prospect of moving and refinancing at today’s rates far less appealing. For many, the higher monthly costs simply aren’t worth it.

Still, not everyone can wait for better conditions.

As Redfin’s Chen Zhao notes, “reasons for moving accumulate,” whether it’s a new job, a growing family, or even more space for that pandemic puppy. These forces are expected to “unlock” more sales, but they’ll be driven by necessity, not opportunity.

Despite the sluggish sales pace, economists project another 2–4% rise in residential real estate prices in 2025. Persistent underbuilding since 2009 has left limited housing supply just as millennials—America’s largest generation—reach the average age of homeownership.

Bottom line? The stalemate continues.

Without a significant shift in mortgage rates or inventory, the housing market will continue its slow crawl. Both buyers and sellers are in a holding pattern, waiting for better days ahead.

MARKETS
3. The Long Road To Privatization 🎲

Bill Ackman recently shared his bold thesis on Fannie Mae and Freddie Mac, the two largest government-sponsored enterprises (GSEs). Together, these mortgage giants carry $8 trillion in liabilities on the federal balance sheet.

What’s a GSE? Think of it as a hybrid between a private company and a government agency. They operate like businesses but with a public mission to make homeownership more accessible.

Ackman argues that a second Trump administration could finally end the GSEs’ 16-year federal conservatorship, potentially unlocking hundreds of billions in profits for the government—and investors like himself.

Here’s the backstory:

• In 2008, Fannie Mae and Freddie Mac guaranteed nearly half of America’s mortgages.

• During the financial crisis, their thin capital reserves couldn’t absorb rising losses. Bankruptcy became a serious risk, putting further pressure on already falling mortgage values.

• To stabilize the housing market, the Bush administration placed the GSEs into conservatorship under the Federal Housing Finance Agency backed by a Senior Preferred Stock Purchase Agreement.

• As part of the agreement, Fannie and Freddie have paid $301 billion to the Treasury.

• In 2019, the Trump administration allowed the GSEs to retain earnings for the first time since the crisis. This has enabled the firms to rebuild their balance sheets—a first step toward privatization.

• Since then, the Biden administration has taken no further action to advance the process, leaving the GSEs’ future uncertain.

Ackman’s thesis? 2025 is the year. He expects a second Trump administration to re-privatize these GSEs, lifting a major overhang on their share prices.

The bull case (Ackman’s view) says a clean exit would let these companies keep more profits, distribute more dividends, and finally trade free of government constraints. That’s part of why Fannie Mae soared 36% and Freddie Mac jumped 34% after Ackman’s post.

The bear case? Politics is unpredictable. The new administration might not make this a priority, and any delay means more time locked in limbo. After all, Ackman himself has held this trade for over a decade without success.

Bottom line: This is part moonshot, part political chess. If Ackman’s vision pans out, it’ll be one of Wall Street’s biggest I-told-you-so moments. But the outcome hinges entirely on government policy, leaving plenty of room for skepticism.

STOCKS
4. Tesla Skids Into 2025 🚗

For the first time in over a decade, Tesla delivered fewer cars in 2024 than in the previous year.

Despite record fourth-quarter deliveries of 495,570 vehicles, Tesla’s total for the year hit 1.79 million—just shy of the 1.81 million achieved in 2023. Aggressive promotions like free Supercharging and interest-free financing boosted Q4 sales but weren’t enough to drive annual growth.

Shares dropped 6% on the news, but the bigger story lies in the mounting challenges facing Tesla’s core EV business:

• Squeezed Margins: Heavy reliance on promotions is cutting into Tesla’s operating margins, raising questions about long-term profitability.

• BYD Closes the Gap: Chinese rival BYD sold nearly as many pure EVs (1.76 million) as Tesla, alongside 2.5 million hybrids. BYD’s aggressive pricing is undercutting Tesla and chipping away at its global market share.

• Ending EV Credit: President-elect Donald Trump has vowed to eliminate federal EV tax credits, which currently lower sticker prices by up to $7,500. Losing this incentive could further dent demand for Tesla’s vehicles.

Yet, Tesla investors remain optimistic—focusing on the future rather than short-term setbacks. Bulls argue that the success of just one of Tesla’s ambitious projects could justify its premium valuation:

• Full Self-Driving (FSD) software

• The Cybercab, a sub-$30,000 autonomous robotaxi

• A new low-cost EV, expected this year

• The humanoid robot Optimus, part of Tesla’s broader AI strategy

At present, however, Tesla is priced like a hyper-growth stock—despite showing no growth.

Whether 2024 was a brief hiccup or a pivotal turning point will depend on Tesla’s ability to shift gears from an automaker into a robotics and AI powerhouse.

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STOCKS
5. Guess That Stock 🕵️‍♂️

Think you can crack this week’s mystery? Below are five clues about a once–near-bankrupt used-car retailer that roared back to life in 2024.

1. This company became famous for its towering, glass “vending machines” that dispense used cars—a symbol of its mission to simplify the car-buying process.

2. After riding the pandemic e-commerce wave, the company’s shares fell 98% in 2022, burdened by rising interest rates, soaring car prices, and heavy debt.

3. Through aggressive debt restructuring, cost-cutting, and rebounding auto demand, the company avoided bankruptcy. Its stock delivered a staggering 1,017% return in 2023 and another 284% in 2024.

4. In Q3 2024, revenue jumped 32% year-over-year to $3.65 billion, while net income hit $148 million—a stark turnaround from its earlier financial struggles.

5. Yesterday, high-profile short-seller Hindenburg Research accused the company of lax loan approvals and questionable insider deals involving its father-son leadership duo—sending the stock down 1.9%.

Got a guess? Tap here to reveal the answer → 

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