Denver retiree David Hester feels like the government sucker-punched him when it took over mortgage providers Fannie Mae and Freddie Mac last weekend.
Hester considered Fannie Mae preferred shares, paying a rich 8.25 percent dividend, a safe investment that the U.S. government would honor even if the companies couldn’t.
“They did not keep their word; that is what it boils down to,” said Hester. “If they can break the fiduciary contract now, what can they do tomorrow? Will they reduce Social Security insurance?”
Dividends on preferred shares in Fannie and Freddie were suspended, contributing to an 80 percent loss in their value Monday.
Included in the $36 billion of preferred shares was $7 billion Fannie sold as recently as December to shore up its capital.
Fannie common shares fell 89 percent Monday, while Freddie shares declined 80.5 percent to penny-stock levels. Fannie shares rebounded 35.6 percent Tuesday, while Freddie shares stayed flat.
The Colorado Public Employees Retirement Association held 827,300 shares of Fannie and 541,300 shares of Freddie as of June 30. Spokeswoman Katie Kaufmanis declined to comment on what hit, if any, the state’s largest pension plan took.
Janus Capital Management dodged a bullet, or two, when it dumped its shares of the mortgage giants this summer.
Denver’s largest money manager reported holding 7.1 million shares of troubled lending giant Fannie Mae as of June 30.
Janus also held 1.55 million shares in Freddie Mac as of June 30, with Janus Worldwide holding just less than half of that.
“As of the end of August 2008, Janus-managed equity portfolios did not own any shares of Freddie Mac common or preferred stock,” the company reported on its website.
Janus did have about 0.05 percent of its total money in Fannie Mae preferred stocks but didn’t hold Fannie Mae common.
“We definitely got the message out there because there were concerns among our fundholders and shareholders,” said Janus spokesman James Aber.
Denver-based Curian Capital, a third-party platform for separately managed accounts, reported holding 470,064 shares in Fannie and 383,688 in Freddie on June 30.
Spokesman Andrew Silver said clients had the ability to sell individual holdings in their funds, but he didn’t know if they did that with Fannie and Freddie.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
