If you could go back a year ago, this was the clear Trump-election trade – a 12x winner | investingLive
At this time last year, plenty of people believed Kamala Harris was a flawed candidate and Trump was poised to win the election, despite betting odds being close. Moreover, Trump carried a Republican sweep, which appeared to be a longshot at the time, particularly in the House.
Many of the ‘Trump trades’ didn’t work. For instance, Jim Cramer touted New Fortress Energy as an LNG approval play and it made wide swings initially as Trump’s odds of winning improved. The company itself proved to have too much debt and is down 86%.
At the time I highlighted a series of seven ideas from Cramer that were Trump trades:
Short Nike (NKE): −2.81% (was down significantly though after Liberation Day)
Short Starbucks (SBUX): −8.94%
Albertsons (ACI): +5.65% (this was a merger trade, still not approved)
Amazon (AMZN): +28.3% (this was more beta rather than anti-trust thesis)
Apple (AAPL): +3.52% (underperformed Nasdaq badly)
Johnson & Johnson (JNJ): +8.42%
New Fortress Energy (NFE): −86.13%
All told those are decent but the S&P 500 gained 15.9% over that time so I’m not sure there’s any alpha here.
The correct answer to the Trump trade was deciphered by Bill Ackman, who highlighted the GSEs (Fannie Mae and Freddie Mac) in December (albeit after the election) as a Trump winner.
I am often asked for stock recommendations, but generally don’t share individual names unless I believe the risk versus the reward is extraordinarily compelling.
As we look toward 2025, one investment in our portfolio stands out for large asymmetric upside versus downside so I thought I would share it.
We have owned Fannie Mae and Freddie Mac common stock for more than a decade. Today, they trade at or around our average cost. As such, they have not been great investments to date.
What makes them particularly interesting today versus any other time in history is that there is a credible path for their removal from conservatorship in the relative short term, that is, in the next two years.
During Trump’s first term, Secretary Mnuchin took steps toward this outcome, but he ran out of time. I expect that in the second Trump administration, Trump and his team will get the job done.
Fannie Mae was trading at $2.65 when he wrote that and it was in thin-late December liquidity. It kicked off a bit of a meme frenzy as it doubled in the following week. However even if you were late to that initial move, there have been 3x gains. if you were smart enough to figure out this trade way back in September 2025 — and there were certainly people talking about it — it was trading at $1.20.
With shares now at $14.40, that’s a 12x return.
FNMA daily
For the Ackman trade, it doesn’t show any particular cunning as he owned it for 10 years before the Trump decision, but it does highlight that sometimes you have to be extraordinarily patient for a trade to work — and work big.
Today, US Commerce Secretary Howard Lutnick is saying the Fannie and Freddie could go public sooner than people think and that it could be the largest IPO in history.