| Valuation method | Value, € | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 12.60 | 103 |
| Graham Formula | n/a |
Federal Home Loan Mortgage Corporation (Freddie Mac) is a key player in the U.S. secondary mortgage market, facilitating liquidity and stability in the housing finance system. Operating through its Single-family and Multifamily segments, Freddie Mac purchases, securitizes, and guarantees residential mortgage loans, supporting lenders and investors. The Single-family segment focuses on single-family mortgage loans, managing credit risk and investment portfolios, while the Multifamily segment handles multifamily loans and securities, serving a diverse clientele including banks, insurers, and institutional investors. Headquartered in McLean, Virginia, Freddie Mac plays a critical role in the U.S. housing market, ensuring access to affordable mortgage financing. Despite its government-sponsored enterprise (GSE) status, Freddie Mac operates with a public listing on the Deutsche Börse (XETRA), reflecting its hybrid public-private structure. With a market cap of €4.03 billion and significant influence in mortgage-backed securities, Freddie Mac remains a cornerstone of the U.S. financial services sector.
Freddie Mac presents a high-risk, high-reward investment profile due to its exposure to U.S. mortgage markets and macroeconomic factors. In FY 2023, the company reported a net loss of €166 million, reflecting volatility in interest rates and housing demand. However, its strong operating cash flow of €7.62 billion underscores its ability to generate liquidity. Investors should note Freddie Mac's substantial total debt of €3.21 trillion, which poses refinancing risks in a rising-rate environment. The stock's beta of 1.672 indicates higher volatility compared to the broader market. While Freddie Mac benefits from implicit government backing as a GSE, its profitability is closely tied to housing market cycles. Dividend-seeking investors may be deterred by the lack of payouts. Overall, Freddie Mac suits investors with a high-risk tolerance and a long-term view on U.S. housing finance.
Freddie Mac operates in a duopoly with Fannie Mae (FNMA) in the U.S. secondary mortgage market, both dominating the GSE space. Its competitive advantage stems from government support, scale, and deep market penetration, allowing it to provide liquidity across economic cycles. Unlike private mortgage insurers, Freddie Mac enjoys lower funding costs due to its GSE status, though it faces regulatory constraints. The company's multifamily segment competes with commercial real estate lenders and private-label securitizers, where its guarantee business provides stability. However, Freddie Mac's reliance on the U.S. housing market exposes it to cyclical risks, and its profitability lags behind private-sector peers due to conservatorship restrictions. Technological advancements in fintech and non-GSE lenders (e.g., Rocket Companies) pose long-term competitive threats, but Freddie Mac's entrenched role in housing policy provides resilience. Its ability to innovate in credit risk transfer (CRT) securities differentiates it in risk management.