Bill Ackman Ups the Ante With Bigger Bet on Fannie and Freddie
Activist investor Bill Ackman has been in the spotlight most recently for his campaign to expose Herbalife (NYSE:HLF) as the pyramid scheme that he believes it to be, but according to the recent filing of his firm’s 13-D with the Securities and Exchange Commission, Pershing Square has upped its stakes in Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK), ValueWalk is reporting.
Ackman’s Pershing Square Capital increased its holdings in the Federally-tied companies from 9.8 percent to nearly 11.1 percent, as whispers indicate that the mortgage-related companies will remain in operation and the bipartisan bill put forth by Senators Johnson and Crapo to overhaul the housing finance process will not pass Congress, ValueWalk said.
Pershing Square now holds about 115 million shares in common stock, a surprising move given that the common stock is seen as a riskier bet than preferred stock. Pershing Square joins Fairholme Capital and Perry Capital, both aggressive buyers of the troubled Fannie and Freddie stocks after the housing and finance crisis resulted in a meteoric fall of the two mortgage giants, after which the federal government stepped in.
ValueWalk says that Ackman’s bet on the firms are an indication that he and his firm are counting on it being around for some time, rather than dissolved or restructured as apart of a housing finance reform measure. CNBC’s Scott Wapner spoke with David Faber, also of CNBC, who said that Ackman had chosen a much more risky approach by purchasing the common stock, while many of the hedge fund players have invested in the preferred, the site said.