After the winter is gone and the spring thaw out is here, some economists believe that the real estate market’s recovery will also come out of a deep freeze and continue to warm up as it did during the last quarter 2013.
If this indeed happens, both Fannie Mae and Freddie Mac will also continue to recover.
When it paid a dividend of $30.4 billion last December, Freddie Mac, Federal Home Loan Mortgage Corp. (OTCBB: FMCC), paid back all of the $71.3 billion it received as a bailout from the government plus an additional $9 billion, according to ValueWalk.
This is the beginning of nice recovery for the government-backed residential mortgage lender that could be bolstered further by a robust housing market.
FMCC shares closed at $3.11 up 11 cents from its closing price of $3.00 the previous day, one volume of 5,855,273 shares.
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2013 Good Year for Multifamily Loans
Meanwhile, Fannie Mae, Federal National Mortgage Association (OTCBB:FNMA), has paid the government back $8.6 billion so far, bringing the total its returned to taxpayers to about $113.9 billion, within striking distance of the $116.1 billion it originally received in its bailout.
Fannie Mae could pay back the balance sometime this quarter, if the housing recovery continues and is sustained by an overall uptick in the economy.
Fannie Mae (OTCBB: FNMA) shares experienced robust stock volume on Feb 11, with 13,370,895 shares changing hands.
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 $3.11 up 11 cents from its closing price of $3.00 the previous day.
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Emerging Smartphone Markets?
In the technology sector, Tokyo Electron Ltd. (OTCPINK: TOELY) was also a very active stock Feb. 11, with 1,183,320 shares changing hands, more than double its three-month average of 532,666 shares.
Although the Tokyo based semiconductor company hasn’t issue any releases or made any news lately, in its last quarterly report of Sept. 30, 2013, the company talked about an ongoing worldwide economic recovery affecting its business.
“In the electronics industry, the primary area of the Tokyo Electron (TEL) Group’s business activities, demand for smartphones continues to grow, particularly in emerging economies, and sales of mobile devices including tablet PCs is firm. As a result of the global expansion of mobile devices, cloud services are growing, and demand for memory used by data centers is rising,” the report concluded.
On Feb.11, shares of TOELY closed at $13.63, up 36 cents from its closing price the previous day of $13.27.
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Solid Fourth-Quarter and 2013 Earnings
Meanwhile, satellite-radio provider Sirius XM Holdings Inc. (NASDAQ: SIRI) has come a long way from the time its share price bottomed at 5 cents in February of 2009.
Sirius recovery is 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 Generated By Acquisition
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. 11, SIRI’s share price closed at $ 3.57, up 8 cents from its closing price of $ 3.49 the previous day on volume of 52,063,092 shares.
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