Freddie Mac will complete on Monday a stock split meant to make its shares more attractive to the kind of people who buy houses with the agency's help.
The 4-for-1 split will bring the price down from more than $100. Many retail investors find this level too steep because of their tendency to think in terms of 100-share lots.
At about $25 a share, stock of Freddie Mac, formally the Federal Home Loan Mortgage Corp., will be more appealing to individuals while still attracting institutional shareholders, industry analysts said.
Institutions make up most of Freddie's stockholder base. After the split there will be about 706 million shares outstanding.
Freddie believes can appeal to the average consumer because of its visibility in the housing market, analysts said.
It also sees itself "as having a public purpose," said Bruce W. Harting, a financial services analyst with Lehman Brothers, and wants "to make the stock available to retail owners."
Broader retail distribution can help raise share prices and reduce volatility, Wall Street observers said.
Investors large and small have plenty of reason to be interested in Freddie's stock, analysts said.
Freddie and Fannie Mae, the Federal National Mortgage Association, "are at the epicenter" of the enormous mortgage finance industry, said Goldman Sachs analyst Robert G. Hottensen. As securitizers of mortgage loans, they "have liquid tools to grow retained portfolios and drive earnings growth."
Freddie's stock jumped from $20 to over $100 in just two months last summer. "Anytime you trend over $100, (a stock split) is something to consider," a spokesman said.
The agency also split its stock in 1992, when the price topped $100.
Fannie Mae split its own stock 4-for-1 last year; the shares were trading at $37 on Tuesday.
