According to Woofun AI, investor Michael Barry, famous for his book “The Big Short,” made the latest characterization of the investment value of Fannie Mae (FNMA.US) and Freddie Mac (FMCC.US), bluntly stating that the shares of these two mortgage giants are now worthless. Although Barry disclosed his shares in these two companies less than a year ago, the current market performance has completely changed its fundamental logic, given that it has been under government control for a long time since the 2008 financial crisis.
Drastic swings in stock prices revealed a rapid reversal in market expectations. Following Donald Trump's victory in the 2024 election, markets generally anticipated that he would deregulate both companies, triggering a significant rise. On Election Day 2024, Fannie Mae (FNMA.US) shares were only $1.39;
However, as the benefits fermented, the stock surged to a peak of $15.31 on September 11, 2025. The market then took a sharp turn, and the stock price had already fallen to $4.04 at the close of Friday. This meant that the stock price fell 74% from its peak, almost erasing about 80% of the increase brought about by the post-election rebound. Freddie Mac (FMCC.US) followed the same trend, rising from $1.20 to $14.15, then falling back to $3.68. In a news release released on Sunday, Barry pointed out that the trend of both stocks has formed a 'head and shoulder' pattern, which traders usually see as a sign that the rebound is over. ' From a technical analysis perspective, this trend means these stocks are worthless, 'Barry wrote. He revealed that he had taken action on two stocks this week, but did not disclose the specific direction.
Notably, in December 2025, he had anticipated that the listing of the two companies would drive up stock prices, but the reality deviated from expectations. According to data compiled by Woofun AI, Barry further emphasized on the X platform that these two stocks formed an extremely obvious pattern of 'head and shoulders plus elbows', confirming signs of peaking.
The underlying risk stems from issues left over from the 2008 relief measures. The US Treasury holds preferred shares. Such shares must be repaid before ordinary shareholders receive any return, and the amount of this debt increases every quarter. Citing stock price data and an analysis report from investment bank KBW, Barry pointed out that Wall Street is increasingly expecting the US Treasury to convert these preferred shares into common shares. He estimated that such a conversion would reduce the current shareholders' shareholders' shareholding ratio by at least 90%.
Furthermore, the macro market environment is not optimistic. Stocks that don't benefit from artificial intelligence concepts have been hit hard this summer. Barry believes that the number of stocks participating in the rebound is declining, and that proportion has dropped to close to the level it was in 2000. Previously, he had warned of a bubble in Anthropic's valuation and indicated that the current stock market is in a state of denial of reality, just like before the 2000 and 2008 crises.
The path to resolution depends entirely on Washington's decisions. Barry once wrote that ordinary shareholders need two things: one is to end government control, and the other is to drastically reduce the US Treasury's debt requirements. Currently, however, neither of these points has been realized. For ordinary shareholders, getting out of trouble no longer depends on market sentiment, but on Washington's willingness to redefine the boundary between debt and equity.