Barry warns Fannie Mae (FNMA.US) has peaked: Technical patterns suggest the rebound is ending

According to Woofun AI, Michael Burry, the investor best known for "The Big Short," has recently offered his latest qualitative assessment of the investment value of Fannie Mae (FNMA.US) and Freddie Mac (FMCC.US), bluntly stating that the stocks of these two mortgage giants are now worthless. Although Burry disclosed holding shares in these companies less than a year ago, their long-standing government conservatorship since the 2008 financial crisis has radically altered the underlying logic of their valuations amid current market performance.

The sharp swings in share prices reveal a swift reversal of market expectations. Following Donald Trump's victory in the 2024 presidential election, the market broadly anticipated he would remove the restrictions on these two companies, triggering a notable rally. On election day in 2024, Fannie Mae (FNMA.US) was trading at just $1.39 per share;

However, as optimism intensified, the stock soared to a peak of $15.31 on September 11, 2025. The rally then reversed dramatically, and by Friday's close, the price had fallen back to $4.04. This represents a 74% drop from the peak, erasing about 80% of the gains made after the post-election surge. Freddie Mac (FMCC.US) exhibited a similar pattern, rising from $1.20 to $14.15, then sliding back to $3.68. In a news briefing released on Sunday, Burry noted that both stocks had formed a 'head and shoulders' pattern, which traders typically view as a signal that a rebound has ended. "From a technical analysis perspective, this pattern means these stocks are now worthless," Burry wrote. He disclosed having taken positions in both stocks this week without revealing the specific direction.

It is worth noting that in December 2025, he had predicted that the public listing of both companies would drive up their share prices, but the reality diverged from expectations. Woofun AI collated data showing that Burry further emphasized on the X platform that these two stocks had formed an extremely clear "head and shoulders with elbow" pattern, confirming signs of having peaked.

The deeper risks stem from issues left unresolved by the 2008 bailout measures. The U.S. Treasury holds preferred shares, which must be repaid before common shareholders receive any returns, and this debt amount increases every quarter. Citing stock price data and an analysis by investment bank KBW, Burry pointed out that Wall Street is increasingly expecting the U.S. Treasury to convert those preferred shares into common stock. He estimated that such a conversion would dilute existing shareholders by at least 90%.

Furthermore, the macro market environment remains pessimistic. This summer, stocks not related to the artificial intelligence theme suffered severe losses. Burry believes the number of stocks participating in the rally is shrinking, with the ratio dropping close to levels seen in 2000. Previously, he had warned of a bubble in Anthropic's valuation and pointed out that the current stock market is in a state of denial, similar to that before the crises of 2000 and 2008.

The solution path relies entirely on decisions made in Washington. Burry previously wrote that common shareholders need two things: an end to government control and a substantial reduction in the U.S. Treasury's claims. However, neither of these goals has yet been achieved. For common shareholders, escaping the predicament no longer depends on market sentiment but rather on whether Washington is willing to redefine the boundary between debt and equity.