Jeffrey Bernardo, chief executive officer of Augustine Asset Management, said his firm started buying Fannie Mae preferred securities a few years ago, when they were trading for less than a dollar and were priced like an option.

“The turn in the housing market has helped Fannie generate profits again,” said Bernardo, whose Jacksonville, Florida- based firm oversees $275 million. “One might think there is a future profit stream.”

Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest. Since they were taken into conservatorship in 2008, the two companies have drawn $187.5 billion from Treasury and have sent back $65.2 billion in dividends, which count as a return on the government’s investment and not as a repayment.

Congressional Approval

A group of lawmakers including Massachusetts Democrat Elizabeth Warren, and Senator David Vitter, a Louisiana Republican, on March 14 introduced a bill that would ensure Fannie Mae and Freddie Mac couldn’t emerge from government control even if they end up paying more to the Treasury than they took in aid. The measure would ban sales of senior-ranking U.S. Treasury-owned preferred shares without Congressional approval and includes a provision blocking the use of fee increases at the enterprises to fund other government spending, moves some investors view as protecting the preferred shares.

The securities jumped last week after Fannie Mae said April 2 it had net income of $17.2 billion for 2012, compared with a loss of $16.9 billion in 2011. Freddie Mac reported in February that it earned $11 billion in 2012, compared with a loss of $5.3 billion in 2011. They fell 1.2 percent as of 3:59 p.m. in New York to $4.26. They’re up from $1.67 since the end of 2012.

‘Total Casino’

Holders of Fannie Mae’s common stock, who would be last in line to recover money in a bankruptcy or so-called receivership, have seen the shares more than triple this year to 90 cents, giving the company a market capitalization of about $5 billion, according to data compiled by Bloomberg. Freddie Mac shares have more than tripled to 86 cents since December.

Users on Investors Hub, an Internet message board popular with day traders, have been talking up the Fannie Mae shares since the earnings release.

“On the common stock side, I think it’s a total casino,” George said. “It’s not very rational.”