Ackman calls Fannie and Freddie 'stupidly cheap', sees 10x return potential

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Updated 1 month ago

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$FNMA $FMCC

Briefing

Bill Ackman has publicly declared Fannie Mae and Freddie Mac among the most attractive equity opportunities available, citing what he describes as 10x return potential. Shares in both government-sponsored enterprises jumped more than 30% following his comments. Michael Burry, known for his subprime mortgage bet, has separately signalled agreement with Ackman's thesis, though Burry cautioned that a Fannie-Freddie IPO is unlikely before 2027.

Ackman backs Fannie and Freddie with 10x return call

Bill Ackman, founder of Pershing Square Capital Management, has publicly labelled Fannie Mae and Freddie Mac "stupidly cheap," arguing the two government-sponsored enterprises represent one of the best buying opportunities he has seen in years. Shares in both entities surged more than 30% in response to the comments, according to Bloomberg and Forbes.

Ackman broadened his remarks to encompass high-quality US equities more generally, telling CNBC it is "one of the best times in a long time" to buy, citing market weakness linked to geopolitical uncertainty surrounding the Iran conflict as the catalyst for what he views as mispricing.

The Fannie-Freddie call has drawn notable support from Michael Burry, the investor whose subprime short position was chronicled in "The Big Short." Burry has aligned with the core thesis, though he has also warned investors that a formal IPO or privatisation of the two mortgage giants is unlikely to materialise before at least 2027, a timeline that would extend the holding period for any position premised on a capital event.

Fannie Mae and Freddie Mac have been under US government conservatorship since 2008. Their privatisation has been discussed intermittently across multiple administrations without resolution, making the timeline risk a central variable for anyone sizing a position on Ackman's thesis. Burry's 2027 floor, if accurate, implies investors must be comfortable with an extended wait before any liquidity event crystallises the embedded value Ackman identifies.

Analysis

Burry's 2027 floor on any capital event is the critical constraint on Ackman's thesis. Positions sized for a near-term privatisation catalyst will be carried through at least two more years of conservatorship, during which FNMA and FMCC remain exposed to any housing market deterioration driven by $115 Brent feeding into 4.2% CPI and a Fed that cannot cut. The 30% single-day surge compresses the margin of safety Ackman cites and front-loads the return for late entrants.
The crypto-backed mortgage approval Fannie Mae accepted recently adds a new tail risk dimension to any FNMA long thesis. If Bitcoin drawdowns trigger collateral liquidation events inside Fannie-eligible loans, conservatorship exit becomes politically and regulatorily harder, not easier. Congressional opposition to privatisation gains a concrete systemic risk argument, which extends Burry's 2027 floor further.
Ackman's broader call that US equities are broadly cheap due to Iran-war-driven mispricing is directionally contradicted by the macro trajectory in recent coverage: OECD at 4.2% inflation, Fink's $150 recession scenario, consumer sentiment collapsing, and Brent at $115 with Houthis widening the conflict. The geopolitical catalyst he identifies as temporary mispricing has institutional backing as a durable inflationary shock, not a mean-reverting event.

Connected Events

Markets · 2 months ago

Fannie Mae accepts crypto-backed mortgages in US first

Fannie Mae's recent approval of crypto-backed mortgages via Coinbase and Better introduces novel collateral liquidation risk into the GSE balance sheet, directly complicating the conservatorship exit narrative that underpins Ackman's privatisation thesis.

Commodities · 2 months ago

Brent on course for record monthly surge as Iran war enters fifth week

Brent topping $115 with Houthis entering the conflict removes the benign oil resolution scenario and keeps the Fed in stagflationary hold, raising mortgage rates and suppressing housing activity in the period when Fannie and Freddie would need a healthy origination market to support a privatisation valuation.

Regulation · 2 months ago

US Labor Department proposes opening 401(k) plans to crypto and private assets

The Labor Department's proposal to open 401(k) plans to private assets and crypto, arriving alongside private credit stress signals, suggests the administration is actively expanding retail access to alternative and non-traditional assets, which is the same deregulatory posture that would support a Fannie-Freddie privatisation push.

Ackman backs Fannie and Freddie with 10x return call

Analysis

Connected Events

Fannie Mae accepts crypto-backed mortgages in US first

Brent on course for record monthly surge as Iran war enters fifth week

US Labor Department proposes opening 401(k) plans to crypto and private assets

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