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Fannie-Freddie Shock Is Latest Blow to Funds in Doomed Trade

  • Capital Group added to its positions through last year
  • Pershing Square is still invested as some hedge funds exited
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WATCH: The U.S. Supreme Court dealt a punishing blow to Fannie Mae and Freddie Mac investors in their challenge to the government’s collection of more than $100 billion in profits from the government-sponsored enterprises.(Source: Bloomberg)
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A plunge in Fannie Mae and Freddie Mac shares after a Supreme Court ruling marked one of the biggest setbacks yet in a disappointing decade for funds that wagered that these entities would one day exit federal control.

Capital Group, Fairholme Capital Management, Paulson & Co., Blackstone Group Inc.’s credit unit, Discovery Capital Management and Pershing Square are among investors that have bet on a massive jump in value for the government-sponsored enterprises.