Fannie/Freddie Takeover: The Builder/Lender Stock "Bump"

CNBC

Now that the government is in charge of the GSE's (can I call them Government "Sponsored" Entities or should that change to something else??), analysts are looking for the builders to reap the rewards, long term in sales and short term in the stocks.

Stephen East of Pali Capital upgraded three builders this morning to a "Buy" rating: Lennar,D.R. Horton and Toll Brothers. It's all based on the GSE's: "We think this action removes a significant amount of uncertainty surrounding the housing market from the table," writes East. "Admittedly, fundamental headwinds still remain for the industry in the form of excess inventory," he adds, "however this action should help ease the credit crisis to some degree..."

From Paul Miller at FBR:

"While these are all clear positives for the U.S. housing market, our chief questions now are how much MBS the Treasury will purchase and whether additional steps are taken to improve the mortgage affordability."

Miller is cautiously optimistic for the stocks in the short term. "Financials will rally in response to the news, in our opinion, but the duration of the rally will be determined by how low interest rates go and by what extent liquidity moves back into the mortgage market," writes Miller.

Companies he says will benefit: Bank of America, Flagstar, National City, PHH, Wachovia, Washington Mutual, and Wells Fargo.

• Fannie, Freddie: The Good And Bad Of Takeover
• Fannie, Freddie Should Be Split Up: Steve Forbes
• View From Stockton As "Stuff" Hits The Fan (nie) And Freddie