Core Insights - Freddie Mac released its Monthly Volume Summary for July 2025, detailing its mortgage-related portfolios, securities issuance, risk management, delinquencies, debt activities, and other investments [1] Company Overview - Freddie Mac's mission is to make home ownership possible for families across the nation, promoting liquidity, stability, and affordability in the housing market throughout all economic cycles [2] - Since its inception in 1970, Freddie Mac has assisted tens of millions of families in buying, renting, or maintaining their homes [2]

Group 1 - Freddie Mac conducted stress tests for 2024 and 2025 under a severely adverse scenario as per the Dodd-Frank Act [1] - The results of these stress tests are available on Freddie Mac's investor resources page [1] Group 2 - Freddie Mac's mission is to enhance liquidity, stability, and affordability in the housing market across all economic cycles [2] - Since its inception in 1970, Freddie Mac has assisted tens of millions of families in buying, renting, or maintaining their homes [2]

Core Viewpoint - Billionaire investor Bill Ackman proposed merging Fannie Mae and Freddie Mac to lower mortgage rates and create significant operational synergies [1][3] Group 1: Proposed Merger Benefits - The merger of Fannie Mae and Freddie Mac is expected to reduce mortgage rates and lower the costs and risks associated with government oversight, as it would consolidate oversight under one institution [3][5] - The combination of Fannie Mae and Freddie Mac could lead to a valuation of nearly $500 billion for both entities combined during their potential initial public offering later this year [4] Group 2: Background Information - Fannie Mae and Freddie Mac were established by Congress to support the housing market by ensuring affordable mortgage financing, but they faced significant challenges during the financial crisis [5][6]

Core Viewpoint - The Trump administration is planning for the initial public offerings (IPOs) of mortgage finance giants Fannie Mae and Freddie Mac later this year, potentially valuing the companies at around $500 billion combined and generating $30 billion for the administration [1]. Group 1: Background and Current Status - Fannie Mae and Freddie Mac have been under federal conservatorship since 2008 due to insolvency during the financial crisis, which was exacerbated by the subprime mortgage meltdown [2][4]. - The exit from conservatorship would represent a significant milestone for these companies, which were established by Congress to support the housing market through affordable mortgage financing [2]. Group 2: Financial Implications and Market Reaction - The companies were bailed out with taxpayer funds, leading to the Treasury receiving preferred shares that have paid billions in dividends over the years [3]. - Recent discussions about privatization have included meetings between Trump and the CEOs of Citigroup and Bank of America, indicating a serious push towards returning these entities to private control [5][6]. - Following the news of potential privatization, shares of Fannie Mae rose by 20% and Freddie Mac increased by 15% [5].

Financial Performance - Net income was $42.9 million, or $0.45 per share[11] - Economic return was 3.3% for the quarter (non-annualized)[11] - Adjusted Distributable Earnings were $45.0 million, or $0.47 per share[11] - The company declared total dividends of $0.39 for the quarter, resulting in a book value per common share of $13.49[11] Portfolio Composition and Strategy - The adjusted long credit portfolio increased by 1% to $3.32 billion as of June 30, 2025, compared to $3.30 billion as of March 31, 2025[11, 18] - The long Agency portfolio increased by 5% to $268.5 million, driven by net purchases[11, 26] - The Longbridge portfolio decreased by 1% to $545.6 million, as a securitization slightly exceeded new originations[11, 29] - 87% of deployed capital was allocated to credit, 2% to agency, and 11% to Longbridge[12] Leverage and Capital Structure - Recourse debt-to-equity ratio was 1.7:1[11] - Total debt-to-equity ratio was 8.7:1, including non-recourse borrowings[11] - Total stockholders' equity was $1.67 billion, including $1.33 billion of common equity and $332 million of preferred equity[11]

Financial Performance Highlights - Farmer Mac achieved core earnings of $93331 thousand YTD 2025[66] - Net Effective Spread was $183883 thousand YTD 2025[66], with a Net Effective Spread percentage of 118%[66] - The company maintained a Tier 1 Capital Ratio of 136% in Q2 2025[38] - Farmer Mac's revenue has a 10-Year Compound Annual Growth Rate (CAGR) of 112%[21] Business Segments - Farm & Ranch Finance segment reported a net volume of $182 billion[30], contributing to 33% of the overall segment volume[30] - Corporate AgFinance segment had a net volume of $2 billion[30], accounting for 26% of the segment volume[30] - The Renewable Energy segment's net volume was $19 billion[30], representing 7% of the total segment volume[30] - P & U Infrastructure Finance segment recorded a net volume of $73 billion[30], making up 20% of the segment volume[30] Capital and Dividends - Core Capital above the Statutory Minimum was $602106 thousand in Q2 2025[66] - The company has increased quarterly dividend payments for 14 consecutive years[42], with a 7% year-over-year increase in 2025[42] Credit Quality - Farmer Mac's average charge-offs are 002% of assets, outperforming the Banks average of 016% and the Farm Credit System average of 009%[46] - The average portfolio Loan-to-Value (LTV) was 47% as of June 30, 2025[44]

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Financial Performance - GAAP Book Value was $1312 per common share and Economic Book Value was $1369 per common share[4] - GAAP Net Income was $022 per common share and Distributable Earnings was $024 per common share[4] - Quarterly Dividend was $036 per common share, resulting in a Dividend Yield of 158%[4] Portfolio Activity - Acquired $876 million of residential mortgage loans and securities, growing the investment portfolio to $108 billion[7] - Purchased $503 million of Non-QM loans[4, 8] - Lima One originated $217 million of new business purpose loans (BPLs)[4, 8] - Added $131 million of Agency MBS[4, 8] Liability Management - Overall leverage rose to 52x, while recourse leverage remained 18x[9] - Issued the 18th Non-QM securitization in May, collateralized by $318 million UPB of loans[11, 23] - Effective cost of funds remained stable at 468%[11] Lima One Highlights - Lima One originated $217 million in total origination volume, with an average coupon of 102% for Q2 originations[4, 12] - New Construction Loans were $72 million, New Rehab Loans were $63 million, and New Bridge Loans were $32 million[12] - Rental Loans Originated were $50 million, and Rental Loans Sold were $38 million, generating $11 million in Gain-on-sale Income with an average coupon of 75%[12] Loan Portfolio Credit Metrics - Non-QM Loans UPB is $488 billion, with an average loan balance of $514K and an LTV of 59%[6, 21] - Single-family Rental Loans UPB is $132 billion, with an average loan balance of $226K and an LTV of 60%[6, 21] - Single-family Transitional Loans UPB is $886 million, with an average loan balance of $540K and an LTV of 68%[6, 21]

Core Insights - Freddie Mac reported its Second Quarter 2025 financial results and filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission [1] - The company will hold a media call at 9 a.m. Eastern Time on July 31, 2025, to discuss its results, which will also be available via webcast [2] - Freddie Mac's mission focuses on promoting liquidity, stability, and affordability in the housing market, having assisted millions of families since its inception in 1970 [3]

Market Overview - Trading in the S&P 500 index has seen reduced volatility, leading to fewer opportunities for profitable trades, but there is increased activity in other stocks [1] - Unusual trading volumes indicate potential accumulation or speculation in certain stocks, suggesting opportunities for volatility outside of major indexes [2] Company Insights Rocket Companies Inc. (RKT) - Rocket Companies has been identified as a stock with significant trading activity, with daily volumes reaching 64.3 million shares on July 22, compared to an average of 20 million shares [7] - The stock trades at a price-to-cash (P/C) ratio of 71x, significantly higher than the finance sector's average of 21.6x, indicating a premium valuation [5] - The current low mortgage cycle presents an opportunity for Rocket to deploy its cash aggressively when mortgage rates decline, potentially increasing demand [6] Wendy's Co. (WEN) - Wendy's stock has seen a decline in short interest by 45.3%, reflecting a shift in investor sentiment amid rising consumer concerns about inflation [8] - The stock trades at 49% of its 52-week high, presenting an attractive risk-to-reward ratio for buyers [9] - Trading volume for Wendy's reached 19.3 million shares on July 22, significantly above its average of six million shares, with analysts projecting a price target of $15.3, indicating a potential rally of 50.5% [10][11] PulteGroup Inc. (PHM) - PulteGroup's earnings per share (EPS) growth is crucial for its stock performance, with analysts projecting an EPS of $3.17 for Q4 2025, following a recent report of $3.03 EPS that beat expectations by 4% [13][14] - Trading volume for PulteGroup increased to five million shares on July 21, indicating heightened investor interest [15] - UBS analyst John Lovallo has set a price target of $150 for PulteGroup, suggesting a potential rally of 28% from current trading levels [15]