Ackman Says Fannie Mae Shares Could Be Worth $47
May 5 (Bloomberg) -- Bill Ackman, who runs the $15 billion Pershing Square Capital Management LP, said that Fannie Mae and Freddie Mac will probably soar because there’s no way to replace the mortgage guarantee companies.
Fannie Mae could be worth $23 to $47 a share over time, said Ackman, 47, speaking at the 19th annual Sohn Investment Conference in New York, where he referred to a 110-slide presentation on the mortgage companies. Fannie Mae reversed losses and rose 3 percent to $4.10 at 4 p.m. in New York trading. Freddie Mac shares rose 6.3 percent to $4.23.
Pershing Square has about 11 percent economic exposure to Fannie Mae and Freddie Mac shares based on common stock outstanding, a stake first disclosed last year. While lawmakers are weighing methods to wind down the companies, Ackman said mortgage rates would jump without the government-sponsored enterprises.
“There is no viable alternative,” to Fannie Mae and Freddie Mac, Ackman said today in a Bloomberg Television interview with Stephanie Ruhle after the Sohn presentation. “Preserving the 30-year prepayable fixed-rate mortgage -- it’s like the bedrock of the housing system -- is critical. We think the only way to do it is by preserving Fannie and Freddie.”
The mortgage giants should “wind down the business of fixed income arbitrage” that got them into trouble during the financial crisis, “and focus on guaranteeing middle class mortgages for credit worthy borrowers,” Ackman said.
