Waterstone: Freddie Mac, Fannie Mae Common Shares 'Worth Zero'

The story of mortgage lenders Fannie Mae and Freddie Mac has been rehearsed many times. Federal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC) experienced unusual activity in their stocks in the latter part of May which skyrocketed their market caps in a matter of hours. While there are several big names who have long positions in Fannie and Freddie, Bruce Berkowitz, John Paulson and Richard Perry are just a few, bearish positions in these companies are less common. Waterstone Market Neutral Fund has short bets in Fannie and Freddie which have not worked well for the fund. Being the largest positions of the hedge fund, Waterstone's overall losses have been sizeable. The hedge...