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

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.