I could probably dig it up somewhere, but i think the leverage for hedging is 100-1, so anytime that market moves in an unexpected direction, it throws off their hedges and they either have to unload or keep buying.
washington.bizjournals.com
Fannie Mae net income falls 25 percent
Jeff Clabaugh
Staff Reporter
District-based Fannie Mae was hurt last quarter by investments it makes to hedge against fluctuating interest rates, but its operating income rose as the U.S. mortgage business continues to post records.
Fannie Mae, the biggest single source of mortgage financing, reports second-quarter income of $1.1 billion, down 24.7 percent from the same quarter a year ago. Core business earnings, or earnings before accounting for derivatives, was $1.86 billion, up 18.2 percent.
The derivative investments Fannie Mae uses to guard against interest rate swings lost $1.9 billion in market value.
During the quarter, Fannie Mae bought back 5.3 million shares of its common stock. Monday, its Board of Directors voted to increase its quarterly dividend from 39 cents to 45 cents.
Fannie Mae stock (NYSE: FNM) was down $1.68 to $69.70 per share in Tuesday trading. Its shares have gained about 8 percent so far this year. |
