Pershing Square Joins Fannie, Freddie Bandwagon

Nov 18 2013 | 1:49pm ET

Pershing Square Capital Management's latest activist target is a big one. Indeed, the very biggest: the U.S. government.

The hedge fund, led by William Ackman, said Friday it had bought nearly 10% stakes in both Fannie Mae and Freddie Mac, the government-controlled mortgage insurance giants that both President Barack Obama and Congressional Republicans favor dismantling, following their massive bailouts by the government during the financial crisis. But now Pershing Square has joined forces with hedge fund Fairholme Capital Management, which last week said he and other investors were interested in buying a recapitalizing Fannie and Freddie.

Pershing Square, which said that the mortgage giants were "undervalued," paid about $500 million for its stakes.

This is the second time Pershing Square has pushed for a restructuring of the two companies; in 2008, Ackman proposed major changes that would have wiped out common shareholders and given him a windfall on his short bets against the companies.

The government, however, seems as uninterested this time as it was last time: A Treasury official said in a Friday statement that the Obama administration "remains committed" to "responsibly winding down" the two companies. Any other outcome would require Congressional approval, and it does not appear to be forthcoming, either.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

Compelling Opportunities In The Alternatives Space

Jul 29 2014 | 9:33am ET

In an environment where many asset classes seem expensive by historical standards...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note