Waterstone Capital Reduces Fannie Mae Short Right Before Big Drop

Bill Ackman, Bruce Berkowitz, and other investors who are long on Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) have gotten most of the attention as GSE reform has become a bigger part of the news cycle, but after a year of rising share prices, in the face of a government promise that dividends will never be paid, those positions also looked like good targets for short sellers.

After taking a beating from shorting Fannie Mae / Federal National Mortgage...