Pershing Square CEO Bill Ackman Reiterates Fannie Mae and Freddie Mac Could Rise 10 Times
Bill Ackman, CEO of Pershing Square, stated on CNBC that Fannie Mae and Freddie Mac stocks could rise 10 times, describing them as the most asymmetrical investment in U.S. stocks that he knows of. He mentioned that both companies have rebuilt their capital, currently at about five times historical levels.
Ackman has been building his position through Pershing Square since October 2013, with a 13D filing showing he held nearly 10% of the outstanding shares at that time. Fannie Mae has approximately 115.57 million shares at an average price of about $2.29, and Freddie Mac has about 63.5 million shares at an average price of about $2.14, with a total investment of around $400 million. He has not significantly reduced his position since then.
The two companies were taken over by the government in 2008, with the Treasury injecting about $191.4 billion and holding preferred shares and warrants for 79.9% of common stock. After a net worth sweep in 2012, all profits were paid to the Treasury. Ackman stated that the two companies have cumulatively paid about $301 billion to the Treasury, covering the principal and exceeding the original contract requirements.
His proposed path is to acknowledge the payments made to settle the preferred shares, allowing the government to exercise the warrants and return to listing on the NYSE. Based on this calculation, the common stock value could reach between $45 and $50. He also warned that if not released before the end of Trump's term, a future Democratic government might use it as a political tool.
The current stock price is around $4, with the market implying a low probability of success. The release needs to address accounting treatment of preferred shares, potential dilution, and politically sensitive mortgage rate issues.
In terms of market mechanisms, long-term holders of common stock are betting that government release and re-listing will lead to a revaluation. Beneficiaries would be shareholders holding common stock, while existing shareholders could face dilution if preferred shares convert to equity or the government retains control.
Source: Public Information
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Bill Ackman disclosed his position in Fannie Mae and Freddie Mac of nearly 10% of outstanding common shares through Pershing Square in 2013, with a cost around the $2 range, and has continued to hold until 2026. During this time, he has experienced net worth sweeps, Supreme Court rulings, and significant price fluctuations but has not exited.
In terms of capital strategy, his approach is to hold common stock of government-controlled entities, waiting for accounting recognition of payments made to settle preferred shares and the exercise of warrants before re-listing. Resource investment is focused on long-term holdings and publicly advocating for a release plan rather than short-term trading.
This is similar to other cases of long-term holding of common stock after government takeovers while waiting for release. Currently, it is a policy window period, and market pricing will continue to discount the probability of success to a low level, while Ackman sees it as a high asymmetry opportunity.
Essentially, this involves a transfer of pricing power. The profits and control of the two companies are long-term held by the Treasury, and the pricing of common stock depends on whether the government acknowledges the excess payments and releases control; once accounting treatment and re-listing are completed, the pricing power shifts from government-backed expectations to market assessments of independent capital and profitability.
ABAB News · Law of Cognition
Government backing is pricing; release is revaluation
Excess payments can be accounted for; preferred shares need to be canceled
Holding for 13 years is waiting for a policy window, not time compounding