Fannie Mae, Federal National Mortgage Association, (OTCBB:FNMA) share volume soared Feb. 28, with 37,640,072 shares changing hands, more than twice its three-month average volume of 17,063,112 shares.
The strong uptick in volume is a result of its strong comeback despite shareholders suing the U.S. government challenging changes that the Treasury Department made to the 2008 bailout of Fannie Mae and a bitter winter slowing housing starts.
Some investors betting on a recovering housing market began buying up shares of Fannie Mae more than a year ago when they were going for pennies. Recently, shares in various classes of the preferred stock are trading near their highest levels since the bailout.
Evidence of Turnaround
On Feb 3, 2014 Fannie Mae announced that it and its lenders financed $28.8 billion in multifamily loans in 2013.
Working with its lender partners to finance 507,000 units of multifamily housing, about 99 percent, or $28.5 billion of the loans that Fannie Mae financed in 2013 were delivered through MBS execution. Fannie Mae met the Federal Housing Finance Agency's goal to reduce multifamily volumes by 10 percent relative to 2012 levels, achieving 95 percent of its total volume capacity.
“The need for quality, affordable rental housing is greater today than it's ever been, and we will continue to do our part by providing liquidity, stability and affordability to the multifamily market and maintaining our credit standards,” Senior Fannie Mae Senior Vice President Jeffery Hayward said, in a written statement.
This is just the latest piece of positive news about the government-sponsored enterprise, charged with stabilizing the secondary mortgage market in the last few days.
On Jan. 29, Judge James Peck approved Lehman Brothers Holdings Inc.’s settlement with Fannie Mae over $18.9 billion in mortgage claims. Under the settlement, Fannie Mae will receive a general unsecured claim of $2.15 billion against Lehman. Under Lehman's Chapter 11 payment plan, this amounts to a recovery of about 25 cents on the dollar, or about $537.5 million.
In addition, Fannie Mae and others’ optimistic outlook for the 2014 housing market is fueling its spike in volume. In a Jan. 13 statement, Fannie Mae’s Chief Economist Doug Duncan said that despite the rise in mortgage rates since the spring, many housing indicators posted strong gains at the end of 2013 and consumer housing attitudes are strengthening, “all of which bodes well for continued but measured housing recovery in 2014.”
In addition, Fannie Mae’s sister company Freddie Mac (FMCC), is planning to sell $1 billion of securities tied to the risk of homeowner defaults, almost matching the amount issued since the deals began last year. This is according to a person with knowledge of the transaction.
FNMA shares closed at $4.80 o Feb 28, up 13 cents from its closing price of $4.67 the previous day.
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Mobile Coverage Available Beyond Cellular Range
In another sector, Mobile satellite service provider Globalstar, Inc. (OTCQB: GSAT) stock volume and value remain steady as a result of the recent unveiling of its new voice and data solution.
The new product provides seamless integration between any Wi-Fi enabled device (i.e., smartphones, tablets, laptops, etc.) and Globalstar's network of satellites. With the new application called Sat-Fi, Globalstar customers can now use their existing smartphones and existing phone numbers to send and receive communications over the Globalstar’s satellite network, offering seamless voice and data connectivity when beyond the range of cellular. This new technology means that people who find themselves outside of cell coverage, for whatever reason, can use their existing smartphones or computers to always stay connected.
Expands Globalstar’s Potential Market
The new application could be a game changer for Globalstar in that it immediately expands its market to the following segments:
- Emergency responders and those impacted by natural or man-made disasters where cell coverage often becomes unavailable, which was experienced during Hurricanes Katrina and Sandy, recent tornado outbreaks and the Northeast blackout of 2003
- Recreational or commercial boat owners and enthusiasts, and their passengers, who need to be able to make calls, send emails and communicate via SMS text messages over satellite while maintaining the capabilities and flexibility of their existing smartphones and computers
- Oil and Gas and other natural resources industries who rely on constant, cost-effective connectivity for work productivity and peace of mind
- Temporary industrial worksites that rely on simple, constant voice and data connectivity within a portable office environment
- Avid outdoor recreationalists, such as hunters, hikers and campers who need assurance when traveling on or off the grid
Shares of GSAT closed at $2.27 on Feb. 28, up 3 cents from $2.24, the previous day’s close.
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Still Riding Wave of Solid Fourth-Quarter and 2013 Earnings
Meanwhile, Sirius XM Holdings Inc. (NASDAQ: SIRI) share price continues to nudge upwards, with little good or bad news being circulated about the company.
Still, the satellite-radio provider Sirius XM Holdings Inc. (NASDAQ: SIRI) has come a long, long way from the time its share price crashed at 5 cents in February of 2009.
Sirius’ total recovery was evident in its fourth-quarter and full-year 2013 earnings reported on Feb. 4, 2014.
The company generated record revenue of $1.0 billion and $3.8 billion in the fourth quarter and full-year, respectively, each up 12%. Net income for the fourth quarter and full-year were $65 million and $377 million, respectively, or $0.01 and $0.06 per diluted common share, respectively.
Income from operations was $245 million and $1.0 billion in the fourth quarter and full-year 2013, respectively. Adjusted EBITDA increased 41% in the fourth quarter to a record $326 million. Full-year 2013 adjusted EBITDA was $1.17 billion, an increase of 27% from $920 million in 2012.
Potential Lawsuits Not Hurting SIRI
Despite a myriad of law-firm of Sirius XM for potential stockholder claims as a result of the satellite-radio investigations company’s proposed acquisition by Liberty Media Corp., its stock price is holding its own.
On Jan. 3, 2014, Liberty Media make an offer to buy Sirius for about $10.4 billion at a rate of $3.68 per share. The deal involves creating a new class of stock called Series C, adding 0.076 per share to give the company a total market value of as much as $27 billion.
Although the pending acquisition has triggered a slew of potential stockholder lawsuits, without Liberty Media, Sirius XM might not have been here today.
That’s because in 2009, Liberty Media kept Sirius XM from going bankrupt with a $530 million loan. As a result, Sirius XM has been able to build a subscriber base 25.6 million strong. It’s done so with a line-up of paid-radio choices including classical, rock, alternative, country, sports and live concerts, including the extremely-popular morning man Howard Stern serving as the company’s anchor. Moreover, having new cars equipped with XM receivers has also boosted the company’s popularity and acceptability. However, Sirius XM still faces brutal competition from such digital radio competitors as Pandora Media Inc., AOLRadio and Apple Inc.
On Feb. 28, SIRI’s share price closed at $3.60, up 1 cent from its closing price of $3.59 the previous day on volume of 28,312,572 shares.
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