Big returns from GSE's

Shares of Fannie Mae and Freddie Mac jumped 164% and 175%, respectively, in the month of November, including an average 45.7% return on the Nov. 30 trading day. The advance was spurred by the election of Donald Trump on views the administration would move to return profits to investors and end the current sweep of profits to the Treasury. The president-elect’s pick of Steven Mnuchin as Treasury secretary triggered the Wednesday gains, as he has been a staunch supporter of moving the two government-sponsored enterprises out of government hands.

At the close of business on Wednesday, the market cap of the two GSEs returned a combined $12.7 billion to investors and $25.4 billion since the end of October. So far these returns are based on pure speculation that a deal can be reached between the Treasury and major shareholders, primarily hedge funds, that have been in litigation over the current sweep arrangement.

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