Fannie Mae, Freddie Mac Become Penny Stocks

July 8, 2010 - (Tip Report) New York - Thursday, July 8th, 2010 marks the first day federal-sponsored mortgage buyers Fannie Mae and Freddie Mac begin trading on the over-the-counter market, which is seeing a growing number of companies moving off of listed exchanges thanks to the recession.

Shares of Fannie Mae now trade under the symbol FNMA, while Freddie Mac trades under the symbol FMCC on the OTCBB.

Both once high-flying New York Stock Exchange listed companies where ordered by the Federal Housing Finance Agency to delist from the NYSE. While the blue-nosed federal agency created by the Obama administration ordered both companies to delist, it was only a matter of time before the NYSE did the job for them, having dropped below the minimum share price requirement.

Now the companies are down in the trenches where trading is comprised of rolled-sleeved traders who hunker down over their monitors continually looking for strengths and weakness in stocks - with an emphasis on the later - buying and selling small blocks alongside of housewives, waitresses and truck drivers. FMCC and FNMA will also become fair game for individual investors who are quick to grab opportunity by the throat if their trading software finds a company that's worth owning a little of and you begin to get a picture of what's in store fro Freddie Mac and Fannie Mae. Gone are the days of institutional buying and selling with a host of analysts recommending the stock. Now they're trading on America's Blue Collar Exchange - the Over The Counter market.

Will FMCC and FNMA appear on some of the stock profile sites that tout penny stocks anytime soon? We doubt it, though it is possible.

Tip Report monitors literally hundreds of penny stock newsletters every week searching for trends in promotional activities which we report on to our subscribers and so far not one of them has even mentioned Fannie Mae or Freddie Mac - but that could change and soon.

It pays to read the fine print

By law, penny stock promoters who use email newsletters to tout stocks are required under Rule 17B to disclose how much they were paid to promote a stock - and who paid them. Tip Report's most-recent story on stock scoundreling noted a Montreal couple that the SEC clamped down on that had disclosed the shares they received but the Complaint itself was more about what they were saying on their website. So I guess if words could kill (your wallet) this pair of stock touts were a deadly duo. But outside of their particular actions, a more clever approach penny stock touts are using is to laud over stocks that they're not involved with - only the street game is to display them as "our previous picks".

Cleverness aside, FNMA and FMCC are just the kind of penny stock blue collar investors should be watching, considering the volatile price swings they're experiencing, which are not going away anytime soon. In fact, now that their trading on the OTC market volatility will most likely increase and that could spell profit if you can catch the action both ways. It could be dream play or nightmare, depending on where you jump in.