Fannie Mae (FNMA), Freddie Mac (FMCC) Stock 'Worthless', Lockhart Says

Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) are on watch today after James Lockhart, the former regulator of the two GSEs, told Reuters that investors are making "worthless" bets buying shares in the government-controlled entities.

"It's a stretch," said Lockhart, who is now vice chairman at WL Ross, about equity recovery in the two. "The stock and the preferred (stock) is worthless and should be worthless," he told Reuters.

Bill Ackman's Pershing Square is among one of the big investors in Fannie and Freddie common stock. Bruce Berkowitz fund Fairholme Funds is also involved in the common and preferred shares. Paulson & Co and Perry Capital LLC also own the preferred.

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