# Michael Burry shifts Fannie Mae, Freddie Mac bets > Burry moves from common to junior preferred shares as $388B Treasury claim threatens shareholder value. - Title: Michael Burry shifts Fannie Mae, Freddie Mac bets | Shortify - Summary: Burry moves from common to junior preferred shares as $388B Treasury claim threatens shareholder value. Michael Burry shifts Fannie Mae and Freddie Mac… - Keywords: michael burry, fannie mae, freddie mac, treasury, preferred shares, common shares, dilution, us housing market, conservatorship, stock market, treasury claim, capital structure - Source: Financialexpress — https://financialexpress.com/market/global-markets/michael-burry-shifts-fannie-mae-freddie-mac-bets-as-388-billion-risk-looms/4363247 - Author: Anjana PV - Published: 2026-10-16T14:20:16+00:00 - Read time: 2 min - Topics: michael burry, fannie mae, freddie mac, treasury, preferred shares, common shares, dilution, us housing market, conservatorship, stock market, treasury claim, capital structure ## Burry changes Fannie/Freddie investment strategy Michael Burry sold common stock and bought junior preferred shares in Fannie Mae and Freddie Mac. > Michael Burry swaps fannie/freddie common stock for junior preferred shares ## Treasury's $388 billion claim concerns shareholders Burry warns Treasury's $388 billion senior preferred claim could dilute common shareholders by 90%. > the government's senior preferred claim has grown to around 388 billion ## Fannie and Freddie's role in housing market Fannie Mae and Freddie Mac help lenders provide home loans by buying mortgages and packaging them into securities. > they do not generally lend directly to homebuyers ## Government conservatorship since 2008 Both companies remain under government control since the 2008 financial crisis. > the us government stepped in to prevent their collapse ## Burry's junior preferred shares strategy Burry believes junior preferred shares offer better risk-reward than common shares if Treasury converts holdings. > junior preferred shares could benefit if dividend payments resume ## Stock chart pattern shows risk Burry describes a 'giant head-and-shoulders-and-elbows top' pattern indicating potential share price collapse. > this is his description of a chart pattern that he believes shows a potential collapse ## Treasury's liquidation preference The Treasury's senior preferred shares have a liquidation preference of $388 billion. > the government's senior preferred claim has grown to around 388 billion ## Dilution risk for shareholders Burry warns common shareholders could lose most investment if Treasury converts preferred shares to common stock. > the dilution percentage could increase further as the treasury's liquidation preference grows ## Preferred shares ranking in capital structure Junior preferred shares rank below senior preferred but ahead of common shares in dividend payouts and liquidation claims. > they rank ahead of common stock in terms of dividend payouts and liquidation claims ## Stock prices after Trump election Fannie and Freddie shares retraced gains since Trump's election and formed a head-and-shoulders pattern. > they put in a giant head-and-shoulders-and-elbows top for added emphasis ## Political decisions impact share value Burry argues government decisions on conservatorship and Treasury claims affect shareholder value. > the companies' future also depends heavily on government policy ## Historical comparison to 1981 Historical analysis shows Fannie Mae's financial position in 1981 raised concerns about management accountability. > the companies' importance to the national housing market can make it difficult for critics to challenge them ## What investors should watch next Investors should monitor government decisions on conservatorship and Treasury's preferred shares. > the central question is whether the us government will make changes that allow fannie mae and freddie mac to operate independently ## Burry's warning about shareholder value Burry warns common shareholders could lose most investment if Treasury converts preferred shares to common stock. > the dilution could reach at least 90 percent ## What happens next Government decisions on conservatorship and Treasury claims will determine shareholder value for Fannie and Freddie. > the treasury's senior preferred claim could dilute common shareholders by 90 percent ## Key takeaway Michael Burry shifts Fannie Mae and Freddie Mac investments to junior preferred shares after warning of potential 90% dilution from Treasury's $388 billion claim.