Citigroup and Wells Fargo have declared a ceasefire in their battle to acquire Wachovia Corp., and William Ackman couldn’t be happier.

Ackman, who heads activist hedge fund Pershing Square Capital Management, told a New York conference that Wachovia could be worth more split in twain than sold whole. Ackman—whose firm bought up an 8% stake in Wachovia soon after Citi announced a deal to buy Wachovia’s banking unit—suggested that Wachovia be split into banking and brokerage, asset management and insurance halves, with the former going to Citi and the latter to a partner, possibly Wells Fargo.

Citi struck its $2.16 billion stock deal for Wachovia’s banking deposits on Sept. 29. Four days later, Wells Fargo announced it had agreed to buy all of Wachovia for $15 billion, leading to a series of lawsuits. Citi and Wells Fargo, prodded by the Federal Reserve, agreed to a two-day litigation break yesterday in an effort to reach a deal on Wachovia.

Ackman said that Wachovia “did the right thing and acted appropriately” when it accepted Wells Fargo’s offer.

The Pershing Square chief added that his firm has bought a stake in all-but-nationalized insurer American International Group, betting that the federal government, which now owns 80% of AIG, will opt for leniency in its bailout of the firm.

The activist is less happy about other things, notably the soon-to-expire ban on short-selling financial stocks. Ackman said the temporary restriction “did more to destroy investor confidence than anything.”

“Short sellers have been blamed for bringing down the market, but since the ban, the markets have been falling even further, which means the longs are selling now,” he said.