I don't share the same political outlook as you guys and that's okay. I simply don't buy into that because IMO it's mere theater. ...
Cheap Bastard, you have some great political points and I won't disagree that theoretically they could play out very easily I just disagree with the whole idea of politics. I'm in the "SELECTED, not ELECTED" part of the park. I just simply don't play it nor believe it to be legit in any form.
Another take: We can speculate on the odds of any of these things coming true, but if they don't, the value of FNMA or FMCC shares could land anywhere between 33 cents and 2 dollars - where they ranged during the Biden administration during a time when there was no thought of privatization. So already this is a less risky bet than rolling the dice on a company which might be heading toward bankruptcy, like many meme stocks.
Finally, one's own political opinions or forecasts might take a back seat to the need for hedging. Privatization of these New Deal era programs would likely expose them to the same financial realities predominant everywhere else in the world. This might mean an end to the unique government risk insurance that enables 15 and 30 year fixed rate mortgages here in the U.S. Within a few years, we could become a nation where a 5 year ARM is the longest-term loan homeowners can obtain. 15-30 year fixed rate loans simply do not make economic sense, which is why private companies don't offer them anywhere else in the world.
This might have good effects, such as insulating government coffers from future housing crises, removing market distortions, or making McMansions uneconomical, but it might also cause a housing price collapse, reduce the home ownership rate, or result in a long period of below-inflation housing appreciation.
As a homeowner, I have to think about how much wealth I would lose from such a development, and how I could compensate myself through FNMA or FMCC stock gains. This is a point where the politics become beside the point, and the very real risk to one's unhedged real estate exposure is the main topic. There is also the chance you make money on Fannie/Freddie and do not experience RE losses, in addition to the risk you lose both ways.*
With FNMA having only a $1.55B market cap, and FMCC at only $709M, these national giants are each smaller than a typical microcap retail bank with a few dozen branches, or about where GME was in late 2020. It would be easy for the price to hit $2 if they got even a little bit of attention.
*The lose both ways scenario might look like a shady deal to sell FNMA or FMCC to a politically connected bank, SPAC, or political ally for far below their value in public markets. This would be the Russia in the 1990s privatization scenario. It also might look like a housing correction early in Trump's second term that puts the elimination of mortgage subsidies on the back burner.