QS Research · Michael Burry's Scion Capital analyst template · 2006
FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE (FNMA)
As of 2026-11-08 · 10/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -22% · upside +96%
The market is not missing the earnings; it is pricing the $14.15B of preferred and other claims ahead of common. At $4.43 FNMA trades at 0.05x $100.51B common equity and 4.1x $1.25B net income to common, with a 1.2% return on common equity, so the base case at today's multiple is roughly today's price (0%). Downside at 0.04x book is ~$3.47 (-22%) and upside at 0.10x book on the Ackman/Pershing release catalyst is ~$8.68 (+96%); the base is not +30% and the long rule is not met. I call watch: interesting conservatorship optionality, not yet a long.
Key numbers
- Share price: $4.43
- Market cap: $5.13B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $29.83B
- P/E (TTM): 4.1x
- Price / book: 0.05x
The 15 boxes
- ✓ 1. Long-form business notes
Fannie Mae is a government-sponsored, stockholder-owned corporation that buys residential mortgages from lenders, securitizes them into guaranteed Fannie Mae MBS, and earns guaranty fees; it does not originate loans or lend directly to borrowers. The latest FY2025 10-K reports net income of $14.4B, net revenues of $29.0B, and net worth of $109.0B at December 31, 2025, with $409.3B of 2025 mortgage-market liquidity. The oldest provided FY2020 10-K shows a much smaller $25.3B net worth and $4.0T of assets at December 31, 2020, with 2020 results hurt by COVID-related credit costs. The company remains in FHFA conservatorship, with Treasury senior preferred liquidation preference at $227.0B as of December 31, 2025 and capital far below enterprise regulatory capital framework requirements.
- ✓ 2. Competitive advantage
Fannie Mae has the classic GSE moat — a federal charter and unmatched scale as the largest guarantor of U.S. residential mortgage debt, with roughly 24% of a $17.0 trillion market at Sep 30, 2025 — and a duopoly-like existence alongside Freddie Mac, including a jointly owned securitization utility. But the sources show that scale does not convert into pricing power: FHFA sets guaranty-fee pricing and minimum return thresholds on loan acquisitions, and the 10-K states return on equity measured against regulatory capital may not be sufficient to attract private equity investors, with a $215 billion shortfall to the risk-based capital requirement including buffers at Dec 31, 2025. The record is flat revenue ($28.96B FY2025 vs $29.95B FY2021) and lower pre-tax income ($17.98B FY2025 vs $27.95B FY2021), while net income to common was only $9.0M in FY2025 against $17.98B of pre-tax income.
- ✓ 3. 10-Q takeaways
Q3 2026 net income rose to $4,177 million from $3,859 million in Q3 2025 (+$318 million, +8%) and from $3,982 million in Q2 2026 (+$195 million, +5%), on $7,651 million of net revenues (+$344 million, +5% YoY; +1% QoQ), but the credit picture deteriorated: provision for credit losses was $1,140 million versus $338 million in Q3 2025 and $485 million in Q2 2026, with multifamily provision of $446 million and both single-family and multifamily serious delinquency at 0.62%. Net worth grew $10.6 billion in the first nine months of 2026 to $119.6 billion, and the illustrative return on average required CET1 rose to 11.1% from 10.8% in Q2 2026, even as a $1,037 million other comprehensive loss in Q3 (unrealized AFS losses) cut total comprehensive income to $3,140 million. Neither the 10-Q nor the same-quarter earnings release gives numeric earnings guidance; forward numbers are macroeconomic (home price growth of 2.7% for full-year 2026).
- ○ 4. Corporate governance
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ○ 6. Other significant filings
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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