Value Investor Daily #80

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Hedge fund manager Bill Ackman recently made the case for Fannie Mae (FNMA) and Freddie Mac (FMCC) stock on X:

Here are the highlights:

• Ackman sees a possible asymmetric investment heading into 2025: Fannie Mae and Freddie Mac common stock.

• He has owned them for over a decade, and while returns have been lackluster so far, he sees a credible path to ending their conservatorship in the next two years.

• Ackman anticipates that a second Trump administration will complete the efforts that began during Trump’s first term, removing Fannie and Freddie from conservatorship.

• Ending conservatorship could generate over $300B in additional profits for the government (on top of $301B of cash the US Treasury has already received) and remove about $8T of liabilities from the government’s balance sheet.

• The organizations have built $168B in capital, and Ackman sees a 2.5% capital ratio as enough to cover potential losses.

• An IPO in Q4 2026 could require raising about $30B, and Ackman estimates a value of $34 per share, with an IPO price of $31. (Both trade at just under $5 today)

• Junior preferreds offer upside too, but Ackman sees more potential with the common stock.

• He noted high uncertainty and to invest only what one can afford to lose.

Although stocks have doubled since his post, they are still down almost 95% from their peak in the early 2000s, before the Great Financial Crisis.

Ackman is hosting a Spaces live call on X to cover his investment thesis in detail on January 16:

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