Michael Burry, the investor known for predicting the 2008 housing crisis, has disclosed sizable positions in the common stock of mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), expressing bullish sentiment on their potential return to public markets.
In a 6,000-word Substack post published on Monday, Burry wrote that he owns a “good size” of shares in both companies and shared optimism that plans to take them public again may be approaching.
“Once each company is released from capital restraint by their IPOs, I expect growth to accelerate naturally,” he wrote.
Burry, who famously profited from the subprime mortgage collapse that tanked the two firms as depicted in the film The Big Short, noted that Fannie and Freddie have rebuilt substantial capital since 2021. The companies currently hold a dominant share of the US mortgage market, accounting for roughly 62% of outstanding home loans.
With the Trump administration now signaling interest in releasing them from conservatorship, Burry believes their IPOs may be nearing. However, he cautioned that “there remains a final steep, windy and rocky climb to IPO for both,” citing regulatory and policy roadblocks.
In his post, Burry outlined that regulatory changes would be necessary for a successful public offering. He highlighted the need for eased capital rules, conversion of preferred shares to common stock, and a reduction in the government’s ownership stake. Without such changes, he warned that common shares could carry limited value.
Shares of Fannie Mae and Freddie Mac, which trade over the counter, rose 6.4% and 7.3%, respectively, on Tuesday.