A Bloomberg report has quoted hedge-fund manager Deepak Narula stating that Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) investors do not deserve any pay from the company. The statement came amid a rising outcry of the investors of the housing company, demanding their fair share from the entity’s profits. However, Narula is completely against such demands.
Why the demand for profits is wrong?
Narula said that investors such as Bill Ackman of Pershing Square Capital Management and Bruce Berkowitz of Fairholme Capital Management do not own any right to demand their share from the profits. He reasoned that these investors did not come to the rescue at the time of financial crisis of 2008, when the government came forward to preserve Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). Narula further commented that it was taxpayers money that truly backed the company and prevented its fall.
In an interview with Bloomberg, Narula boldly stated that taking a legal route to extract money from Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), which belongs to taxpayers is not justifiable. Following Narula’s reactions, representatives of Fairholme Capital and that of Pershing Square refused to respond to the statements.
Hedge Funds did not respond
It is noteworthy that Federal National Mortgage Assctn Fnni Mae (OTCBB:FNMA) shareholders ranging from big hedge funds to small individuals have objected to the bailout agreement that mandated the housing company to direct its profits to the Treasury. These shareholders have argued that the government is wrongfully taking the profits and not allowing the company to rebuild its capital in order to withstand any future crisis. These shareholders received a major blow in September last year when a court ruled against the plaintiffs.
The stock of Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) was up by 1.04% to $2.92 as 4.52 million shares traded hands.