Pershing Square Tells Investors to Have Faith in the GSEs (Really)
By Paul Muolo
pmuolo@imfpubs.com
Pershing Square Capital Management, the largest holder of GSE common stock, is telling its shareholders to be patient with its investment in Fannie Mae and Freddie Mac, despite the drubbing the shares have taken this year.
As IMFnews went to press Monday, Fannie common was trading for $1.40 a share compared to a 52-week high of $3.31 and a low of $1.21. Freddie common was selling for $1.55. Its high for the year is $3.24, its low $1.20.
In a recent letter to shareholders, the investment company said, “We attribute this decline to investor frustration at the lack of progress on housing finance reform efforts in Congress, which seem to have stalled in the run up to the midterm elections, and, we believe, forced selling from certain large investment firms that have recently begun to wind down their operations.”
Pershing Square, which is managed by veteran Wall Street investor Bill Ackman, bought its stake in the GSEs earlier in the decade at prices north of $2.00 a share, on average. The fund owns roughly 9.9 percent of each.
Like most speculators in Fannie/Freddie common and preferred, the fund hopes eventually Congress will approve a “recap and release” plan, which – in theory – would increase the value of those shares.
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