Ackman Calls Fannie And Freddie Release A 'Political Imperative' For Republicans, Sees 'Half A Trillion' Of Value
Pershing Square's CEO says freeing the two mortgage giants is a legacy play for the president, and he would not mind a Supreme Court fight.
Pershing Square CEO Bill Ackman said on the firm's third-quarter earnings Q&A call that releasing Fannie Mae and Freddie Mac from government conservatorship is a "political imperative" for Republicans, not just an economic one. He estimated that resolving the two companies would create "half a trillion" dollars of value, 80% of it held by taxpayers.
Why Republicans should let go
Answering a shareholder's multi-part question, Ackman said Pershing Square owns about 10% of both companies, which it treats almost as a single position, with a little over 200 million shares. When it comes to a release, he said, the decision is up to the president.
His argument was political. In conservatorship, he said, "the government has godlike powers" over housing policy, mortgage terms and underwriting. Those powers now sit atop what he called extremely well-capitalized, highly profitable entities, and he said Republicans cannot be sure the next president will be one of their own.
Ackman said the Treasury Secretary has told him the ownership question must be resolved in 2027-2028, before the president leaves office.
A bell-ringing and a legacy
The shareholder also asked about the midterm elections, held that night. Ackman said at least one chamber of Congress is expected to leave Republican hands, which would tie the president's hands on policy needing congressional approval. Resolving Fannie and Freddie, he said, is a massive piece of economic policy still undone.
He pictured the president ringing the New York Stock Exchange bell and delivering "hundreds of billions of dollars of value to taxpayers." Ackman said he is being conservative with the half-trillion estimate. "It will be the greatest real estate deal of all time," he said, adding that it is one of the few things the president can still get done. He is optimistic it happens "sooner rather than later."
Fine with a Supreme Court fight
On the shareholder lawsuit, which shareholders won and the government keeps appealing, Ackman said he does not know whether the case will go to the Supreme Court. The recovery, he said, is not as large as it should be, and he called the episode one of the worst economic takings in the country's history.
"I wouldn't mind going to the Supreme Court," Ackman said, because it might draw more attention to how unfair it was.
$24 billion in fee-paying assets
Separately, Ackman said Pershing Square now has $24 billion of fee-paying assets under management, up a billion since the end of September purely from performance. He said that is as if the firm had raised a new fund of more than a billion dollars. He also said the firm is not interested in raising open-ended fund capital.
Ackman's own timeline is the Treasury Secretary's 2027-2028 window, before the president leaves office.
Sources
- Pershing Square Q3 earnings helped by strong fee-related earnings growth (PS:NYSE) | Seeking Alpha — seekingalpha.com
- Watch CNBC's full interview with Bill Ackman, Pershing Square CEO — CNBC
- Pershing Square Inc. Non-GAAP EPS of $0.12 in-line, revenue of $75.64M beats by $0.17M (NYSE:PS) | Seeking Alpha — seekingalpha.com
- Pershing Square: Q3 Earnings Snapshot | wusa9.com — Associated Press
- Bill Ackman's Pershing Square Says Wall Street Is 'Penalizing Hyperscalers' For Build-Out Costs, Ignoring Growth Potential — Yahoo Finance
