# Michael Burry Warns Fannie Mae and Freddie Mac Shares Risk Dilution and Technical Collapse

- URL: https://stocks.freetheai.org/news/michael-burry-warns-fannie-mae-and-freddie-mac-shares-risk-dilution-and-bd4699
- Published: 2026-10-12T08:56:56Z
- Category: company_news; sentiment: bearish; impact: high
- Symbols: [OTC:FNMA](https://stocks.freetheai.org/symbols/OTC-FNMA), [OTC:FMCC](https://stocks.freetheai.org/symbols/OTC-FMCC)
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Investor Michael Burry warned that stock in Federal National Mortgage Association (OTC:FNMA) and Federal Home Loan Mortgage Corp. (OTC:FMCC) could become essentially worthless. Recent price declines have erased gains made since Donald Trump's election. Burry pointed to a completed top technical chart pattern indicating that speculative momentum has cleared out, leaving shares vulnerable to further drops as broader investor focus stays centered on artificial intelligence stocks.

Beyond technical chart patterns, fundamental risks center on the U.S. Treasury's growing senior preferred stock liquidation preference. Wall Street expectations are moving toward a potential government conversion of preferred holdings into common equity. Such a conversion would severely dilute existing common shareholders by at least 90%, destroying most of the equity value held by current investors.

Unlocking value in the mortgage giants would require major policy actions, such as exiting government conservatorship or significantly lowering the government's preferred liquidation preference. Market participants will be watching for regulatory and legislative developments to see if federal officials take steps to restructure the government's ownership stake.

## Key points

- Michael Burry warned that technical chart patterns signal Fannie Mae and Freddie Mac stocks could become worthless.
- A potential conversion of U.S. Treasury senior preferred stock into common shares risks diluting shareholders by at least 90%.
- Both stocks have lost significant value this year, with FNMA down over 62% and FMCC down over 63% year-to-date.
- Unlocking underlying equity value depends on ending government conservatorship or cutting senior preferred liquidation preferences.

## Questions and answers

### Why did Michael Burry warn about Fannie Mae and Freddie Mac stock?

Michael Burry cited technical chart patterns indicating a severe price breakdown and warned that converting U.S. Treasury preferred stock into common shares could dilute current shareholders by at least 90%.

### How much have Fannie Mae and Freddie Mac stocks fallen this year?

Year-to-date, FNMA has fallen 62.35% and FMCC has declined 63.71%, wiping out gains accumulated since Donald Trump's election.

### What needs to happen for Fannie Mae and Freddie Mac to recover value?

Unlocking value in the mortgage companies requires federal policy action to end government conservatorship or significantly decrease the government's senior preferred stock liquidation preference.