Hedges Bet on Fannie, Freddie Rise

From WSJ: Some of the hedge funds that made fortunes in the housing-market crash are now betting on the recovery of Fannie Mae FNMA +13.33% and Freddie Mac, FMCC +9.57% the government-controlled mortgage giants.

Paulson & Co. and Perry Capital LLC are among a handful of hedge-fund firms that have bought so-called preferred shares in Fannie and Freddie, which collapsed in value in 2008 after the companies were taken over by the federal government.

These firms are hoping Fannie and Freddie's recent return to profitability on the back of a recovering housing market will lead the companies eventually to make payments to preferred shareholders.

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