Is Fannie or Freddie in your portfolio?
Do your retirement funds have any Fannie Mae or Freddie Mac stock in them? If so, you may want to check how much you've lost. Kai Ryssdal did, and he talks with Marketplace Money host Tess Vigeland about the financial hit you might not be aware of.
Signs at Fannie Mae, Freddie Mac buildings (Getty Images / Marketplace)
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INSTITUTIONAL HOLDINGS IN FANNIE MAE
As of June 30, 2008 there were 1.076 billion common shares outstanding according to Fannie's latest quarterly filing.
| Institution | Number of shares |
|---|---|
| Alliance Bernstein LP | 134.17 million as of June 30 |
| Dodge & Cox Inc | 119.81 million as of July 31 |
| Capital Research Global Investors | 116.9 million as of June 30 |
| Fidelity Management & Research | 56.62 million as of June 30 |
| Lord Abbett & Co | 48.89 million as of June 30 |
| Citigroup Global Markets | 47.59 million as of June 30 |
| Barclays Global Investors | 43.58 million as of June 30 |
| Merrill Lynch | 41.66 million as of June 30 |
| State Street Global Advisors | 34.73 million as of June 30 |
| Vanguard Group | 32.99 million as of June 30 |
INSTITUTIONAL HOLDINGS IN FREDDIE MAC
As of July 28, 2008 there were 647 million common shares outstanding according to Freddie's latest quarterly filing.
| Institution | Number of shares |
|---|---|
| Legg Mason | 79.88 million as of July 31 |
| Capital Research | 64.87 million as of June 30 |
| Alliance Bernstein | 41.03 million as of June 30 |
| Pzena Investment Management | 33.41 million as of June 30 |
| Hotchkis & Wiley Capital | 30.7 million as of June 30 |
| Citigroup Global Markets | 28.96 million as of June 30 |
| Capital World Investors | 28.96 million as of June 30 |
| Barclays Global Investors | 26.51 million as of June 30 |
| Brandes Investment Partners | 25.86 million as of June 30 |
| Fidelity Management & Research | 21.98 million as of June 30 |
TEXT OF INTERVIEW
KAI RYSSDAL: Henry Paulson cost me more than $400 yesterday. Just reached right into my retirement account and took it. Not literally. But he might as well have.
As we told you yesterday, his decision to have the government take over Fannie Mae and Freddie Mac sent stock investors running for the door. The two company's share prices dropped about 80 percent. After we got off the air yesterday I got to wondering whether my retirement funds had any Fannie or Freddie in them. Ten minutes and some online research later I discovered my account was $447 worse off than when the day began. That prompted me to ask Tess Vigeland to come by and talk about how many others might be in the same boat.
Hi, Tess.
VIGELAND: Hello, Kai. Boy, that buys a lot of diapers, doesn't it?
RYSSDAL: 447 bucks. I mean, you gotta be kidding me. But, obviously, I'm not the only one, right?
VIGELAND: You are not. Of course all this depends on where you're invested, who you're invested with, but let's look at a couple of examples for folks. Start with Dodge and Cox, a very popular investment firm. Second-largest institutional holder of Fannie Mae stock -- almost 120 million shares as of July 31st. Now, as of last Friday, the final trading day before all this happened, the company says that Fannie Mae made up 0.7 percent of their balanced fund, a full percent of their stock fund, 1.7 percent of their global stock fund. So, if you have any of those, you can do the math based on your own portfolio. Here's the kicker, though. They went on a Fannie spree recently. According to Morningstar, Dodge and Cox's stock fund and balanced fund were the two top buyers of Fannie stock leading up to the end of the second quarter. And trust me, we were hearing word of problems there.
RYSSDAL: So what were these guys doing? These fund managers who were buying these companies?
VIGELAND: Well, basically, they made the prediction that the government would ride to the rescue, that it would prop up Fannie Mae and Freddie Mac. What they didn't bet on was shareholders being last in line in a government bailout.
RYSSDAL: What do -- just to pick on them a little more -- Dodge and Cox, have to say about this?
VIGELAND: They did put up a statement on their website and, if I may paraphrase, they said, "Fannie and Freddie said they had plenty of money . . ."
RYSSDAL: Yeah. Right.
VIGELAND: Well, you know what, my mom said there was a tooth fairy.
RYSSDAL: Who else out there has been buying Fannie and Freddie?
VIGELAND: Well, let's look at Fidelity -- a mutual fund company close to us.
RYSSDAL: It manages our 403(b)s.
VIGELAND: And they are another investment firm that actually bought more Fannie stock as things were starting to get shaky. They added more than 10 million shares to their funds in the second quarter. That's 5 percent of Fannie's outstanding stock. And, some of the funds that you'll find it in -- Fidelity Equity Income, Fidelity Growth and Income. One familiar to you -- Fidelity Balanced Fund, which, as you mentioned, shaved off 447 of your dollars.
RYSSDAL: Run down the list of the other top 10, though. I mean, Fidelity's well known. Dodge and Cox. Some of the others?
VIGELAND: Oh, you've got Vanguard. You've got T. Rowe price. Hancock Funds. All of them now left holding the bag on both Fannie and Freddie. And speaking of Freddie... On the Freddie side -- we've been talking mostly about Fannie -- Wellington, the biggest recent buyer there. And Legg Mason, 80 million shares. More than 12 percent of the company, also after a recent buying spree.
RYSSDAL: Very quickly before we move on. Who was smart enough to get out of Fannie and Freddie?
VIGELAND: Well, Bloomberg did some research on that. We'll credit them. And they found that Oppenheimer sold off a whole bunch of Fannie and Freddie. And Capital World, which runs American Funds, also sold off. But they still own 1.5 percent of the company.
RYSSDAL: Lots of names, as I mentioned. Will have some links on our website, Marketplace.org, if you want to do some research for yourself. Tess Vigeland hosts our personal finance program. It is called Marketplace Money, which is why we call her for fun stories like this. Tess, thanks a lot.
VIGELAND: Thanks, Kai.
Comments
Comment | Refresh
From Havre De Grace, MD, 09/11/2008
In your segment on: Is Fannie ...
Portfolio, you missed one huge example
of them being in your portfolio.
INDEX FUNDS! Until S&P finally dropped
them from the 500, all Index funds
based on that index had some exposure.
Now, most funds based on everything
not in the 500 will have some, albeit
probably a smaller, exposure.
The point is that the amount of money
collectively invested in these funds
is huge, and may actually dwarf at least
some, if not all of the funds that you
mentioned (e.g., U.S. Government
Employee's Thrift Savings Plan C Fund).
From Del Mar, CA, 09/10/2008
NPR missed the real story.All these experts bought because the Co's were sound and would recover.Bush and the R's have been trying to kill the FM's for 8 years and give their business to Wall St.Classic"Disaster Capitalism"see Naomi Klein's "The Shock Doctrine". The "bail out" requires the FM's to phase out of the lending business.Now home buyers will pay higher fees and more interest to private companies.A major Bush-R goal,that they failed to achieve in Congress, realized under the "cover" of needed protection for our capital markets while the housing bubble works it self out.Backing the FM's paper was a good thing.Bush and the R's went beyond that to destroy the FM's and privatize the mortgage bundling business,which was their goal all along.
The funds did not think that would or could happen.They would have known better if they had read Klein's book and "connected the dots".They correctly read the financial picture but failed to consider the Political risk.
From Bemidji, MN, 09/09/2008
We saw multi-million dollar annual salaries for the CEO's of these two companies and now a multi-billion tax payer bailout. Isn't capitalism a nifty deal for the top one percent.
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