Investors are cashing in on Fannie Mae and Freddie Mac preferred stock, placing bets that both Enterprises will return to private firms.
Fannie Mae’s 8.25% of preferred shares have more than doubled this year to $4.31 on Friday.
“The idea is eventually, as these companies have paid back their debt to the government, they could potentially be turned back on,” said Bose George, an analyst at Keefe Bruyette & Woods.