Morgan Analyst Says to Short Fannie

Short-sellers reduced their bets against Fannie Mae in February, but late Thursday a top equities analyst suggested that shorting Fannie's stock might be a good way to make a quick killing.In a note to investors, Morgan Stanley analyst Ken Posner advised "going long" on Freddie Mac's shares and shorting Fannie's, for a potential 12% return. Morgan also reduced its target price on Fannie from $72 to $65, citing a report that the government-sponsored enterprise is facing an additional $2.8 billion in losses on top of an already-known possible restatement of $9.2 billion. (Fannie Mae would not comment on the report.) Mr. Posner's recommendation to short Fannie's stock came a few days after the Feb. 15 short figures were released. At mid-month, speculators had sold short 18.8 million shares worth of Fannie Mae stock, a 29% drop from mid-January.