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The Day That Bill Ackman Runs Out Of Money

|Includes:Fannie Mae (FNMA), HLF, JCP

Right after the 1929 Crash,Jesse Livermore was worth 100 million dollars after successfully shorting the Market.By 1934 he was completely bankrupt after the rules of trading changed because of the crash.Many on Wall Street consider him to be the all-time best trader ever.He also made a mint off the 1907 Crash but gave it all back on a blown Cotton trade.Jesse would later say he broke his own rules resulting in heavy losses on both occasions.Fast forward to November 2013 as William Ackman's Pershing Square Fund takes a big position in Fannie Mae - FNMA - and Freddie Mac.His bet is that the U.S. government will put the 2 stocks back into private hands at some point.This broad assumption takes a wide turn around the fact that all revenue goes back to the U.S.Treasury at the end of every quarter.Why would the Government give up on this cash cow? Let's face it,the year has not been kind to Ackman.The Herbalife - HLF - short has been a losing trade for quite some time while a big loss is already in the books for JC Penney - JCP -.Is this trade on Fannie and Freddie a way for Bill Ackman to get back some prestige after a couple of bad trades? Time will tell if this latest position will pay off or go by the wayside.Pershing Square is taking a big gamble here on the U.S. government switching gears.This trade I would personally take a pass on.Betting on the Government changing its position now looks a lot like guessing on what direction Cotton was headed in Livermore's day.Too much of a gamble at a time when another miss might prove fatal to a Fund Manager' career.Because even someone as big as William Ackman can eventually run out of money.Jesse Livermore would tell him that.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: FNMA, HLF, JCP