Market Today: Ackman Sees Upside in Fannie Mae and Freddie Mac Amid Portfolio Shifts

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Dec 30, 2024
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Market Overview

The stock market concluded with losses, continuing a broad retreat that began on Friday. Despite the decline, major indices managed to close above their session lows due to technical movements after the S&P 500 dipped below its 50-day moving average of 5,942. This initially attracted buy-the-dip interest, but the key technical level shifted from support to resistance, leading to lateral movement below that level throughout the afternoon.

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Indices Performance

  • S&P 500: Closed about 64 points lower, marking a 1.1% decline, after being more than 100 points lower at its intraday close.
  • Nasdaq Composite: Traded down as much as 1.9% at its low and closed 1.2% below its prior close.

Notable Stock Movements

Turnaround action in NVIDIA (NVDA) helped major indices move off session lows. NVDA shares had been down as much as 2.2% at their lowest point but ended the day at 137.49, up by 0.48 or 0.4%.

Market Sentiment

The overall sentiment remained negative throughout the session. Decliners led advancers by a 2-to-1 margin at the NYSE and a 3-to-2 margin at the Nasdaq. All 11 S&P 500 sectors experienced declines, ranging from 0.1% in energy to 1.6% in consumer discretionary.

Market Influences

The downside bias was attributed to profit-taking after a strong year and caution ahead of New Year's holiday closures. Several foreign markets will be closed tomorrow or closing early for the holiday. U.S. markets will be open for a full day of trading on Tuesday but will be closed on Wednesday.

Bond Market

Treasuries saw gains, benefiting from safe-haven buying and rebalancing activity as stocks faced selling pressure. The 10-year yield settled seven basis points lower at 4.55%, while the 2-year yield settled eight basis points lower at 4.25%.

Guru Stock Picks

Carl Icahn has made the following transactions:

  • Reduce in SWX by 12.61%
  • Add in UAN by 0.18%

Jana Partners has made the following transactions:

  • Add in RPD by 0.95%

Murray Stahl has made the following transactions:

  • Reduce in TPL by 3.15%

Today's News

Bill Ackman (Trades, Portfolio), the billionaire hedge fund manager, expressed optimism about the common shares of Fannie Mae (FNMA, Financial) and Freddie Mac (FMCC, Financial), citing potential for significant upside. Ackman, through his fund Pershing Square, has held shares in these government-sponsored enterprises for over a decade. He believes there is a credible path to their removal from conservatorship in the next two years, which could result in substantial profits for the federal government and reduce liabilities.

Max Wasserman of Miramar Capital advised investors to de-risk their portfolios by reducing positions in high-valuation stocks like Apple (AAPL, Financial), Microsoft (MSFT, Financial), and Tesla (TSLA, Financial). He predicts a 10% market pullback, affecting these "Magnificent Seven" stocks due to their high valuations and recent growth. Wasserman also recommended short-term bond market investments, given the high 10-year yield.

Quantum computing stocks, including Rigetti Computing (RGTI, Financial) and D-Wave Quantum (QBTS, Financial), saw declines, despite a year of significant gains. The sector has attracted attention following major developments, such as Alphabet's (GOOGL) new quantum chip and Amazon's (AMZN) quantum program. Investors remain cautiously optimistic about the sector's future potential.

Archer Daniels Midland (ADM, Financial) faced calls for CEO Juan Luciano's resignation over a lack of transparency regarding an accounting probe. The probe has led to a $12 billion market value loss, with critics arguing that ADM has failed to communicate effectively about the situation.

Faraday Future (FFIE, Financial) surged on news of its upcoming FX prototype car unveiling at CES 2025, alongside the delivery of its first FF 91 2.0 Futurist Alliance EV. Entrepreneur Luke Hans will play a significant role in the company's business development and sales efforts as a Developer Co-Creation Officer.

FTAI Aviation (FTAI, Financial) launched a strategic capital initiative with institutional investors to acquire aircraft, expecting to deploy over $3 billion annually. The company also provided financial guidance for 2025, projecting significant EBITDA contributions from its aviation leasing and aerospace products segments.

Vacasa (VCSA, Financial) accepted a takeover offer from Casago, combining their strengths to enhance the vacation rental management platform. The deal is valued at approximately $129 million in equity, with analysts noting the thorough exploration of strategic alternatives by Vacasa.

Archer Aviation (ACHR, Financial) announced plans to double its common shares and adjust board membership requirements, resulting in a significant share price drop. Despite this, the company's stock has risen substantially year-to-date.

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Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.