Source: Fortune
Summary
Billionaire investor Bill Ackman tweeted that Fannie Mae and Freddie Mac are “stupidly cheap” and could be a 10X investment. The tweet sent the stocks surging, with Fannie Mae up 41% and Freddie Mac up 34%. Ackman’s firm, Pershing Square Capital Management, is the largest common shareholder in both companies. Ackman has been a long-time advocate for privatizing the two government-sponsored enterprises. The valuation disparity between the companies’ earnings and market cap is striking, with Fannie printing $14.4 billion in net income last year and Freddie printing $10.7 billion. The bullish case for the GSEs is that the Trump administration will privatize them via an IPO, but this has been the thesis since 2008 and has yet to materialize.
Our Reading
The numbers tell one story.
Ackman’s tweet sparked a surge in Fannie Mae and Freddie Mac stocks, but he’s not a neutral source – his firm is the largest common shareholder in both companies. The timing of the tweet, on the last trading day of Q1 2026, raises eyebrows. Ackman has previous experience with well-timed tweets, having published a detailed thesis on the GSE trade on Dec. 30, 2024, which sent shares surging. The valuation disparity between the companies’ earnings and market cap is striking, but the bullish case for the GSEs has been around since 2008 and has yet to materialize. Ackman’s confidence in the trade is clear, but investors should consider his vested interest.
Ackman’s message to investors is to “ignore the bears” and buy Fannie and Freddie, but critics argue that a rushed privatization process could raise borrowing costs and risk re-creating the conditions that fueled the Great Recession.
Author: Evan Null
