Today I want to tell you about one of the weirdest stocks I’ve ever encountered.

And it’s absolutely crushing it right now on as we prepare for Trump’s return to the White House.

Last month, I shared three bizarre “Trump Trades” that I predicted would skyrocket on Trump’s reelection.

This was at a private meeting in Baltimore that we held for James’ subscribers – some of you might have attended.

James challenged us speakers to come equipped with our weirdest stocks ideas, if we had them.

During my talk, I shared:

• The emerging leader in CBD-enhanced beverages
• An obscure microcap that owns the world’s largest reserve of gold
• And America’s largest company by assets – which just happens to be a tiny small cap

These were, admittedly, some really really strange stock picks.

But they’re doing well. They’ve returned -16%, +34% and +151% since I gave my talk on October 1.

I’ll highlight one today. It’s the stock that’s already up 151%. And I’m talking about it now because it may still have an additional 1,000% upside.

The Government’s Cash Cow

Full disclosure – I bought shares of this company about 6 years ago. It’s sitting in some brokerage account that I’ve completely forgotten about. Seriously, I don’t know where this brokerage account is because my bank pawned off its brokerage wing and I don’t know what happened to it. So I bought more a week ago.

Anyway.

If you had to guess what America’s largest company was by total assets, what would you guess?

Hint – it’s not listed on a major exchange.

And its total assets eclipse the top 10 publicly listed companies that are on a major exchange – combined.

AT&T, SoftBank, Royal Dutch Shell, Microsoft, Verizon, Exxon Mobil, Alphabet, Apple, TotalEnergies SE, and Chevron.

Add all of them up, and their total assets are worth less than this one, obscure small cap.

It gets weirder.

This company is undervalued by – get this – about 96%.

And it has 10 times more money IN CASH than the total value of all of its shares.

I’m talking about the Federal National Mortgage Association, otherwise known as “Fannie Mae.”

You probably remember the story. Fannie Mae was delisted from the NYSE when the government bailed them out along with Freddie Mac after the housing debacle in 2008.

Both companies have been under a conservatorship with the federal government ever since.

The deal was they had to pay everything back that the government lent them. Then, maybe one day, a conversation could be had about removing the shackles and letting the companies return private.

Fannie Mae alone received a $116 billion bailout.

Here’s the thing. Fannie Mae paid all of its debts 10 years ago.

By 2015, it had paid the government $142 billion.

By 2019, they were up to $300 billion.

And I don’t even know how much they’ve paid since then.

My guess is they’re up to $500 billion by now.

Which means the federal government has made a greater than 300% return on the mortgage giants since they were bailed out.

Back From the Dead?

Look, I don’t feel any pity for Fannie and Freddie.

They destroyed the economy in 2008.

But there’s an argument to be made that so long as they remain under the government’s thumb, they can’t fulfill their true duty of liquifying the secondary mortgage market, thereby making borrowing more accessible to prospective homeowners.

This has become a political issue now that mortgage rates are at 20-year highs. And homes are a LOT more expensive than they were 20 years ago.

There’s also the argument to be made that the government’s conservatorship was illegal in the first place, and amounts to the seizure of private assets – and that the profits accrued belong to shareholders, not the government.

(Yo Uncle Sam – where my money?)

Opponents, however, argue that letting the companies go private will increase the cost of mortgages. Under the conservatorship, Fannie can borrow money from the Treasury at lower rates – and has lower capital holding requirements – than banks. So Fannie would have to charge more in order to return to an equal footing with the banks they compete with.

Me? I don’t have an opinion on the matter.

It’s irrelevant either way.

Donald Trump has already issued his plan to privatize the companies again. It’s an idea he floated in his first term, and the stock has been drifting higher for the last year and a half as investors awoke to the realization that Trump was probably going to win. And with a Republican-controlled Congress and Supreme Court, there’s a good chance he’ll get his way.

If the company goes private, it means Fannie will buy back all of the shares we own – at a potentially much higher multiple than they’re trading now.

This Chart Makes Me LOL

It’s a funny chart, isn’t it?

You almost can’t tell the stock is up over 500% since its low in 2022.

The stock still trades over the counter on the pink sheets. I bought shares through Interactive Brokers last week.

It’s trading for around $3 per share.

Fannie’s total portfolio value is about $4.3 trillion. Again, it’s the largest company by assets. The company itself is worth about $90 billion.

The stock, however, has a market cap worth just over $3 billion.

So the stock is technically trading at a 96% discount.

The reason is – there has been no demand for the stock for the last 16 years because the company can’t return profits to shareholders.

When everyone goes to sell, it creates market dislocations where companies can trade well below book value. This is a dramatic example, but there are quite a few companies like this. We own a few stocks trading below book value in Microcap Millionaire.

However, if the company goes private, there’s an argument to be made we’ll see up to a 1,000% return from these levels.

That’s because Fannie Mae has $38 billion in cash and cash equivalents – and another $38 billion in unrestricted cash according to their most recent earnings statement.

That first $38 billion alone is enough to buy back all the shares at a 10x multiple to where they are now.

I’m not saying Fannie will indefinitely buy them back at that price. But if enough investors buy the stock, it’s likely Fannie will still be willing to pay any price they’re able to in order to escape the conservatorship.

This is a weird, risky play, because there’s … no playbook for this. But if you like asymmetric bets, this one’s up there.

#YOLO