Log in to your IBTimes Account

close
ID
Password
  • Set your IBTimes.com Edition

Freddie Mac and Fannie Mae Plunge on UBS Downgrades



By Elizabeth Harrow
26 November 2007 @ 02:14 pm ET

Troubled siblings Freddie Mac and Fannie Mae have watched their shares take a sharp tumble today after UBS downgraded both companies from "buy" to "neutral." In a note, UBS stated the somewhat-obvious motivation for the downgrade apparently, credit pressures are eroding the earnings-per-share and dividend prospects for the federally sponsored lenders. The dual downgrade has had a notable effect, with FRE trading at a loss of more than 8% and FNM down nearly 10% as we head into the afternoon.

Quotes
FRE 1.2 0

Unfortunately, the duo are vulnerable to further downgrades from brokerage firms. Between the pair, Zacks reports that 5 "strong buys" and 3 "buys" are still on the table, along with 9 "holds" and 3 "strong sells." Meanwhile, option traders are displaying a rather alarming lack of pessimism toward the underperforming siblings FRE's Schaeffer's put/call open interest ratio of 1.09 is near the middle of its annual range, as is FNM's ratio of 1.08.

While both stocks have plunged amid the recent credit-market morass, it may interest those of you with a morbid curiosity to know that Fannie Mae has outperformed Freddie Mac on a relative-strength basis since mid-2006... though, in light of recent developments, this probably falls under the category of "cold comfort" for Fannie Mae investors.

Copyright Schaeffer's Investment Research

    Click!
  • Rate this article:

Comments

Post Your Comment

*Name


advertisement
More Global Markets
Today's extraordinary loose monetary conditions are "benefiting hard assets," according to James Passin, co-founder and manager of Firebird Global Fund a...
he 12z FRIDAY operational GFS still shows a significant event developing for the eastern portions of the Upper Plains and Midwest 11/23-11/24. T...
Despite a stronger U.S Dollar today the Gold traders made a late session push and closing over my 1st Resistance level. I believe this is simple speculat...

advertisement
Advertisement
POS Magnetic Card Readers

Online distributor for point of sale equipment, TYSSO and Pegasus.

 
IBTimes.com Web
Partners
International Business Times© 2009 The Ibtimes Company. All Rights Reserved. Terms of service | Privacy Policy | Advertising | About Us | Contact Us | Archives