$6 billion Between Friends

Originally Published In the News November 30, 2007 8:58 AM

We smelled opportunity last week in the shares of Fannie and Freddie, and it appears the near term crisis has passed for the two GSE’s. Freddie Mac completed a $6 billion sale of preferred stock to strengthen the balance sheet. The deal was oversubscribed 5 to 1, and you have to wonder what Richard Pzena’s cut of the selling concession amounted to. His pitch for Freddie at the Value Investing Congress had the slow money crowd fired up, and the underwriters barely broke a sweat. Pimco took down a slug of the deal as well; who does not piggyback them?

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