Fannie Mae and Freddie Mac stocks dropped on Wednesday, after a judge threw out a lawsuit brought by investors in the companies to stop the government from making the companies pay a quarterly dividend to the U.S. Treasury. Per Reuters:
Fannie Mae fell 50% to $1.33 a share from a close of $2.69 on Tuesday, while Freddie Mac shares lost 47% to $1.40 a share. Both companies saw more than 8.5 million shares traded in premarket action.
Currently, Fannie and Freddie profits go to the government, and the investors were suing for their perceived share.
The decision favors the Federal government and its decision to take over the now government-sponsored enterprises.
Tim Pagliara, executive director of Investors Unite, issued the following statement in an email to HousingWire:
"Investors Unite doubts that Congress ever intended for the conservatorship to lead to nationalization of the GSEs with no compensation for shareholders. We disagree with Judge Lamberth's decision and we look forward to reviewing what comes out of discovery in the Fairholme trial."