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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

Video player cover image — 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)

By

Katherine Burton and

June 23, 2021, 10:31 PM UTCUpdated onJune 24, 2021, 2:07 PM UTC

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.