Fannie Mae chairman James A. Johnson pitched his company's stock to thousands of brokers at the largest retail brokerage houses last week, as part of a broad effort to attract small investors.

In four sessions, Mr. Johnson spoke by closed-circuit systems to retail brokers at Merrill Lynch & Co., PaineWebber Inc., Smith Barney & Co., and Prudential Securities Corp. He outlined Fannie Mae's business, its ties to the government, the risks it faces, and how it is affected by changes in the housing market.

Analysts say smaller investors have stayed away from Fannie Mae's stock because of its high price and because the agency's business of buying and securitizing home loans is difficult to grasp intuitively.

"The average consumer doesn't know what (Fannie Mae's) product is," explained analyst Gary Gordon of PaineWebber. "They don't pass a Fannie Mae outlet. It's hard for them to buy Fannie Mae because they can't visualize it."

About 15% of Fannie Mae's 1.1 billion shares outstanding are held by individuals. The rest are in the hands of institutional investors such as pension funds and money managers.

A 4-for-1 stock split this year has made the shares of what is formally known as the Federal National Mortgage Association far more affordable; they closed last week at $31. Now the agency is trying to get its message out to small investors through retail brokers.

The conventional wisdom is that increasing retail ownership of a largely institutional stock is good because it makes the stock less volatile and strengthens its price. Investor relations specialists say, however, that it is difficult though not impossible to change the shareholder mix appreciably.

In Fannie Mae's case, said Thomas O'Donnell, an analyst at Smith Barney, an additional advantage of increasing individual holdings is evident. The move could reduce Fannie's political risk by creating a grass-roots constituency that might lobby lawmakers if Fannie's profits and stock price were threatened by changes in the rules of the game, such as a user fee on its securities.

"Political risk should be lower with the wider ownership," Mr. O'Donnell said.

"If a congressman were to receive a letter or phone call from a constituent regarding any matter, he would likely listen to it," he said. "If the constituent owns some Fannie shares, and the proposal is negative to Fannie, those people could come to (Fannie's) support on an issue."

Will Fannie Mae succeed in attracting significant numbers of retail investors? Mr. Gordon, who presented Mr. Johnson to PaineWebber's brokers, said he didn't know.

Mr. O'Donnell, who introduced Mr. Johnson at Smith Barney, was more bullish. He estimated that Fannie Mae could succeed in moving up to 4% of its stock each year into the hands of individuals.

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