Bill Ackman boosts Fannie Mae and Freddie Mac stocks dramatically

In late 2024, Bill Ackman, a prominent hedge fund manager, expressed his expectations regarding the future of Fannie Mae and Freddie Mac, two major U.S. government-owned mortgage lenders. These entities have been under governmental conservatorship since the 2008 financial crisis, a direct consequence of the housing market collapse that year. This conservatorship was established to stabilize the housing and mortgage markets, essential for funding home mortgages in the United States. Ackman, a well-known supporter of Donald Trump, stated that he believes Trump will aim to remove these companies from conservatorship and return them to private ownership during his anticipated second term. Ackman highlighted the substantial financial implications of privatizing Fannie Mae and Freddie Mac. He projected that a successful emergence from conservatorship could lead to over $300 billion in profits for the federal government, in addition to the already distributed $301 billion to the Treasury. Moreover, he estimated that removing Fannie Mae and Freddie Mac from conservatorship would eliminate approximately $8 trillion in liabilities from government balance sheets, representing a significant financial benefit. Ackman, who is also a major shareholder of these companies, sees a credible path to this privatization occurring as soon as within the next two years. Additionally, he noted that during Trump's first administration, the groundwork for this endeavor was laid, but a lack of time hindered its full realization. However, Ackman remains optimistic, asserting that Trump's affinity for major business deals will drive this initiative, labeling it as potentially the most significant transaction in U.S. history. Following his remarks, shares of both Fannie Mae and Freddie Mac experienced a notable surge, indicating investor confidence in the potential for privatization. Despite Ackman's optimism, he acknowledged that uncertainty remains. The pathway to privatization could encounter various challenges and public scrutiny, particularly given the impact on the housing market and the responsibility of these enterprises in supporting home loans. Overall, the upcoming political climate and economic strategies under the Trump administration will play a crucial role in determining the future of Fannie Mae and Freddie Mac.