Bill Ackman Says Fannie Mae, Freddie Mac Could Surge 10-Fold as Midterms Mark Potential Turning Point for Conservatorship Exit: ‘We Set the Rules’

Billionaire investor Bill Ackman, founder of Pershing Square Inc. (NYSE: PS), said Fannie Mae and Freddie Mac could see a "10-fold" increase from current share prices, as he pushes for their release from federal conservatorship.

Ackman wrote in his quarterly letter to shareholders, issued Monday, that he sees that potential for Federal National Mortgage Association (OTC: FNMA), known as Fannie Mae, and Federal Home Loan Mortgage Corporation (OTC: FMCC), known as Freddie Mac.

He also told CNBC’s "Squawk Box" that the midterm elections could be a turning point for their exit from government control.

Ackman on Conservatorship Exit

Ackman said the entities are not being touched right now because of the midterms. "The reason why it’s not being touched right now is, you know, midterms," he said, according to the report.

Fannie and Freddie buy mortgages from banks and other lenders and package them into mortgage-backed securities, known as MBS. The entities were placed into conservatorship in September 2008 and have traded over the counter since being delisted from the New York Stock Exchange in 2010.

Ackman argued that privatizing them would insulate them from political influence. In one scenario he described, Democrats win the White House while conservatorship remains in place and push the entities toward lower credit standards, which he said would affect trillions of dollars in outstanding mortgage securities. "That only gets resolved in a world in which they exit conservatorship, they become publicly traded companies that are owned by institutional and retail investors," said Ackman, as per the report. He added that "we set the rules. In conservatorship, the president can do anything."

Treasury and Bessent on Exit Plan

Treasury would need an exit plan for its roughly $388 billion ownership stake in the entities, held through preferred securities and warrants, and Congress may also need to pass legislation restructuring the government’s role in mortgage financing, according to CNBC.

Treasury Secretary Scott Bessent had said on 2WAY’s "The Morning Meeting" that any move must ensure agency mortgage spreads over Treasuries do not increase. Ackman had also backed a swift exit in an X post, replying "True" to a user warning that delay could leave a "massive war chest" for Democrats if they regain power in 2028. In March, he criticized Treasury’s 2012 Net Worth Sweep, saying the companies have paid Treasury $301 billion after a $193 billion senior preferred stock investment.

Price Action: Fannie Mae shares rose 8.81% to close at $5.56 on Tuesday, while Freddie Mac shares rose 6.61% to close at $5.00.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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