Federal Home Loan Mortgage Corp (OTCBB:FMCC) Embroiled in Lawsuit over Ownership — Fannie Mae (OTCBB:FNMA) also Getting Attention

Posted by Chris Bell June 11, 2013 0 Comment 8289 views


Northern, WI 06/10/2013 (GDPInsider) – Federal Home Loan Mortgage Corp (OTCBB:FMCC) has been having an interesting time in the last few trading weeks.

The stock has been on a tear and last week recorded several breakout valuations. Things have settled down a bit now though and FMCC has been trading on pullback, seeing declines of -1.59% and -4.30% in its last two trading sessions respectively.

This recent downtrend hasn’t been able to mask the spectacular momentum picked up over the last few weeks though and FMCC has added 1,143.89% to its 52-week low since August 2012.

The recent uptrend has been making big news and in recent market valuations the focus has been put on FMCC’s ownership, along with that of sister mortgage lender, FNMA. A recent lawsuit by shareholders of both lenders alleges that the 2008 takeover by the U.S. government in 2008 was wholly illegal and subsequently cost investors billions of dollars.

The crux of the suit is that the takeover whilst it shored up confidence in the U.S. housing sector was detrimental to the underlying value of shares on both companies. The suit alleges that, “while beneficial to the economic welfare of the nation, destroyed the value of Fannie Mae’s and Freddie Mac’s common and preferred stock and trampled the private ownership rights” of shareholders.”

Investors have been keeping a keen eye on valuations of both FNMA and FMCC as the shareholders are seeking a whopping $41 billion in damages.

Some experts believe however, that the renewed interest in ownership for both companies is only being rekindled due to the record profits being posted in light of the rebound in the economy and the housing sector. FMCC posted earnings of $11 billion for 2012 while FNMA posted record earnings of $17.2 billion.

There’s also another subtext to the recent disquiet because with the increased revenues has a come a massive uptick in share valuations for both FMCC and FNMA. The consensus is that shareholders now hold the view that bothy companies now have enough to cash to handle a large pay out should the lawsuit succeed.

FMCC has a RSI of 51.25 suggesting that even with recent increased market valuations, investors might have room to benefit from potentially greater gains.

 

Is FMCC a solid investment at these levels? Get exclusive data and trends here.

 

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About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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