Our colleague Matt Phillips over at MarketBeat exults in the fact that Fannie Mae and Freddie mac are finally being delisted, which makes sense, since they stopped being real, actual companies the day the government took them over.
First things first. Fannie and Freddie aren’t real companies. The total equity in the two companies is a negative $146.9 billion, according to Bose George, an equity analyst covering the mortgage and housing sectors for Keefe, Bruyette & Woods. In short, these are government-owned zombie entities that would have been shut down by regulators long ago, if the regulators didn’t own them.
At one time there was a solid base of institutional shareholders for these firms. But that changed a long time ago, when the underpinnings of these entities was fatally disrupted by the subprime crisis. In short, any investors are long gone. “It’s largely day traders, I don’t think it’s people that care about the fundamentals that much,” George said of those who own the shares, in a quick chat with MarketBeat.
And those that have been dealing in these shares have basically been playing a giant game of hot potato, so much so that at points during rally off the March 2009 lows, Fannie and Freddie — valueless companies! worse than valueless! — made up some of the heaviest volume of any stocks.
The next step will be for the federal government to further acknowledge reality and add these behemoths to its balance sheet. But we won’t hold our breath for that one.