B. Riley FBR analyst Randy Binner initiated coverage of Freddie Mac, writing that the prospect of government-sponsored enterprises reform could create trading volatility in GSE common and preferred shares.

Housing availability and affordability will likely be major focus points in any reform package. If positive equity can be maintained, then the $14 billion face value of junior preferreds, which trade at 42 cents on the dollar, may have upside in a reform scenario, he said.

"We view an election shift toward Democrats as likely to slow, if not halt, the GSE reform process," Binner wrote.

The analyst initiated coverage with a "neutral" rating. The price target is $2.00.