(TheStreet) - Legendary short-seller Michael Burry is best known for shorting subprime mortgages before the 2008 market crash.
In fact, the 2015 Hollywood film "The Big Short" turned him into a household name when actor Christian Bale played his character.
It was in 2005 itself that the Scion Asset Management founder began to notice a housing market bubble and began shorting. When the bubble finally burst and Wall Street crashed in 2008, his $100 million fund turned into one of the most profitable trades of history.
But 2008 isn't his only claim to fame. In 2000, he shorted overvalued tech stocks before the dot-com bubble burst. In 2021, He flagged the risk in meme stocks and crypto leverage before those markets collapsed. He has frequently criticized cryptocurrencies like Bitcoin (BTC) too.
Latest, he has backed a bullish call by billionaire hedge fund manager Bill Ackman.
Burry concurs with Ackman's Fannie Mae and Freddie Mac call
Amid the ongoing market volatility, Burry wrote on X, "Shorts are not forever." The post implied an optimistic outlook on the markets.
He also supported Ackman's recommendation to buy high-quality stocks at cheap prices amid the war between the U.S.-Israel and Iran.
Ackman said this is one of the "most one-sided wars in history" that will end well for the U.S. and the world. Some of the world's "highest quality" businesses are trading at "extremely cheap prices," he added.
The billionaire urged investors to ignore the bears and mainstream media, and said it's one of the best times in a long time to buy quality stocks.
Ackman, in particular, highlighted the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FMCC) as trading at "stupidly cheap" prices. Both could surge 10 times and it could happen soon, he added.
Popularly known as Fannie Mae (FNMA) and Freddie Mac (FMCC), the two government-sponsored businesses are built to prop up mortgages.
They purchase mortgages on the secondary market, issue them as mortgage-backed securities (MBSs), and guarantee payments to investors. While the enterprises don’t issue mortgages themselves, they issue guidelines around them.
In June last year, the Federal Housing Finance Agency (FHFA) director William Pulte issued an order directing both enterprises to consider crypto assets as part of mortgage requests.
Early this month, the mortgage company Better Home & Finance and the U.S. crypto exchange Coinbase (Nasdaq: COIN) launched a new mortgage product that allows home buyers to pledge their crypto holdings as collateral when getting a Fannie Mae-backed mortgage. It means Fannie Mae will soon accept so-called crypto-backed mortgages for the first time.
As Ackman recommended Fannie Mae and Freddie Mac, Burry supported the call, "Cannot emphasize enough how rare this is in this market."
By Anand Sinha
