FMCKJ

FMCKJ is the OTC ticker for Federal Home Loan Mortgage Corporation 5.0% Non-Cumulative Preferred Stock, Series J. It was issued by Freddie Mac (formally the Federal Home Loan Mortgage Corporation) to raise capital before the 2008 financial crisis.

Each share has a par value of $50 and originally paid a 5.0% annual dividend, which translates to $2.50 per share per year. Since September 2008, when the Federal Housing Finance Agency (FHFA) placed Freddie Mac into conservatorship, all dividends on junior preferred shares including FMCKJ have been suspended.

FMCKJ trades on the OTC Pink Sheets at a deep discount to its $50 par value. This discount reflects the market's uncertainty about whether and how the conservatorship will end — and whether junior preferred shareholders will ever see par value restored.

As a non-cumulative preferred, FMCKJ does not accrue unpaid dividends. Unlike cumulative preferred stock, the years of missed dividends since 2008 are gone permanently. The value proposition rests entirely on a return to par through recapitalization or release from conservatorship.

Conservatorship: Freddie Mac has been under FHFA conservatorship since September 7, 2008. This is the longest conservatorship in U.S. history, spanning over 17 years with no definitive end date set.

Dividends: All dividends on junior preferred shares, including FMCKJ, have been suspended since conservatorship began. Under the original PSPAs, Freddie Mac paid a 10% dividend to Treasury on its senior preferred. In 2012, the Third Amendment replaced this with a Net Worth Sweep, taking nearly all profits every quarter.

Legal Landscape: Shareholders have filed numerous lawsuits challenging the Net Worth Sweep and the government's treatment of junior preferred shareholders. Key cases have worked through federal courts, establishing important legal precedents regarding shareholder rights in conservatorship.

Recapitalization Path: Both FHFA and Treasury have acknowledged the need for the GSEs to build capital. The Enterprise Regulatory Capital Framework (ERCF) established capital requirements that Freddie Mac will need to meet before exiting conservatorship. Retained earnings and potential capital raises are the primary mechanisms being discussed.