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- š° 5 Fact Friday: Fannie, Freddie, and the Privatization Play
š° 5 Fact Friday: Fannie, Freddie, and the Privatization Play
Bill Ackman recently shared his bold thesis on Fannie Mae and Freddie Mac, the two largest government-sponsored enterprises. Together, these mortgage giants carry $8 trillion in liabilities on the federal balance sheet.
Hey Money Maniacs,
Happy New Year! Sure, the S&P 500 slid 1.6% in the final days of 2024āits worst year-end since ā05ā¦
But we just wrapped up two straight 20%+ years, a Bitcoin double-up, and gold hitting record highs. Not too shabby, right?
Now, letās talk 2025. Weāre kicking things off with our first annual Prediction Surveyāscroll down and share your two cents!
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 Appleās 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 crucialā¦
Nvidia is actually buying up the stock too.
Theyāve invested more in this one company than any otherā¦ nearly $150 million.
Is this stock the next Nvidiaā¦ which has gone up 81,700% over the last 20 years?
REAL ESTATE
2. No Hope For A Housing Boom ā
The U.S. housing market feels like a game of freeze tag gone wrongāstalled by high mortgage rates and ballooning costs for buyers.
Interest rate cuts were supposed to bring long-awaited relief, but with the Fed signaling fewerāor noācuts 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.
Whatās holding the market back?
Mortgage Rates: Rates are projected to settle between 6.3ā6.5% in 2025. Surveys show that many buyers wonāt pull the trigger until rates dip closer to 5.5%, which looks unlikely in the near term.
Affordability Crunch: Home prices are up 30% from pre-COVID levels, far outpacing income growth. Plus, rising insurance and property taxes arenāt helping.
Locked-In Sellers: Nearly 60% of mortgages carry sub-4% rates, making the prospect of moving and refinancing at todayās rates far less appealing. For many, the higher monthly costs simply arenāt worth it.

Still, not everyone can wait for better conditions.
As Redfinās Chen Zhao notes, āreasons for moving accumulate,ā whether itās a new job, a growing family, or even more space for that pandemic puppy. These forces are expected to āunlockā more sales, but theyāll be driven by necessity, not opportunity.
Despite the sluggish sales pace, economists project another 2ā4% rise in residential real estate prices in 2025. Persistent underbuilding since 2009 has left limited housing supply just as millennialsāAmericaās largest generationāreach 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 š²
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.
Whatās 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 GSEsā 16-year federal conservatorship, potentially unlocking hundreds of billions in profits for the governmentāand investors like himself.
Hereās the backstory:
In 2008, Fannie Mae and Freddie Mac guaranteed nearly half of Americaās mortgages.
During the financial crisis, their thin capital reserves couldnāt 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 sheetsāa first step toward privatization.
Since then, the Biden administration has taken no further action to advance the process, leaving the GSEsā future uncertain.
Ackmanās 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 (Ackmanās view) says a clean exit would let these companies keep more profits, distribute more dividends, and finally trade free of government constraints. Thatās part of why Fannie Mae soared 36% and Freddie Mac jumped 34% after Ackmanās 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 Ackmanās vision pans out, itāll be one of Wall Streetās 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 š
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, Teslaās total for the year hit 1.79 millionājust shy of the 1.81 million achieved in 2023. Aggressive promotions like free Supercharging and interest-free financing boosted Q4 sales but werenāt enough to drive annual growth.
Shares dropped 6% on the news, but the bigger story lies in the mounting challenges facing Teslaās core EV business:
Squeezed Margins: Heavy reliance on promotions is cutting into Teslaās 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. BYDās 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 Teslaās vehicles.
Yet, Tesla investors remain optimisticāfocusing on the future rather than short-term setbacks. Bulls argue that the success of just one of Teslaās 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 Teslaās broader AI strategy
At present, however, Tesla is priced like a hyper-growth stockādespite showing no growth.
Whether 2024 was a brief hiccup or a pivotal turning point will depend on Teslaās ability to shift gears from an automaker into a robotics and AI powerhouse.
OUR PARTNER: THE DAILY UPSIDE
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STOCKS
5. Guess That Stock šµļøāāļø
Think you can crack this weekās mystery? Below are five clues about a onceānear-bankrupt used-car retailer that roared back to life in 2024.
1. This company became famous for its towering, glass āvending machinesā that dispense used carsāa symbol of its mission to simplify the car-buying process.
2. After riding the pandemic e-commerce wave, the companyās 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 millionāa 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 duoāsending the stock down 1.9%.
Got a guess? Tap here to reveal the answer ā
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