The Misfits: Federal Agricultural Mortgage Corporation (Farmer Mac) (AGM)
The gem of the GSEs.
This month marks the 15th anniversary of the Federal Housing Finance Agency taking Fannie Mae and Freddie Mac into conservatorship. It was one of the government's major sweeping actions to prevent the U.S. financial system from collapsing. In the not-so-distant past, investing in federal mortgage government-sponsored entities (GSEs) was a brilliant idea. Before the collapse of the real estate market during the Great Recession, both Fannie Mae and Freddie Mac were considered incredible investments. Until 2007, Fannie Mae had averaged a compounded annual return of 47% for more than 30 years prior.
I’ll admit that this doesn’t appear to be the best way to set up a discussion of a GSE. That said, Fannie Mae and Freddie Mac aren’t the only GSEs out there, and some haven’t had the misfortune of being intricately tied to a market that got completely wiped out in a matter of months.
Federal Agricultural Mortgage Corporation (NYSE: AGM), or Farmer Mac, is perhaps the least discussed of the GSEs, but it is arguably the best of the bunch. You could even argue it was one of the better investments of the past 30 years.
Let’s dig deeper into this unique capital markets company and see what makes it stand above its GSE peers as a true wealth creation machine.
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