Seeking Alpha

Ackman takes big stakes in the GSEs

  • Pershing Square discloses a 9.98% stake in the common stock of Fannie Mae (FNMA) and a 9.77% stake in the common of Freddie Mac (FMCC), and its intention to get involved in the reorganization discussions.
  • "In light of the proposed Fairholme transaction on behalf of certain holders of preferred stock of the Issuer which was reported in the financial press, the Reporting Persons have determined that they may engage in discussions with management, the board, other stockholders of the Issuer, representatives of the Federal government, and other relevant parties ..."
Comments (27)
  • Reasonable idea from hedge fund consortium vs. Congress` desire to keep suckling two huge cash cows?

     

    My money is on the greedy forces of congress.
    15 Nov 2013, 09:12 AM Reply Like
  • Totally agree with you. Commons are *extremely risky*, after I saw how Corker and Warren's Senate bill back in June is about "taxpayers". I would say even Preferreds are at risk. Trade accordingly.
    15 Nov 2013, 09:25 AM Reply Like
  • "My money is on the greedy forces of congress. "

     

    You mean as in caving due to the contributions to their campaigns from the hedge funds?
    15 Nov 2013, 09:29 AM Reply Like
  • The money/ profits from Fannie and Freddie dwarfs the money from Wall Street contributions.
    15 Nov 2013, 09:59 AM Reply Like
  • Agreed. I don't know why value investors are getting involved in this one, given that political odds are so hard to handicap. Unless they know something we don't......
    15 Nov 2013, 06:34 PM Reply Like
  • Given Herbalife and JCP do we think theres money to be made going opposite Ackman at this point?
    15 Nov 2013, 09:32 AM Reply Like
  • To Mike Maher
    Ackman is right about Herbalife. it is a pyramide scheme and eventually will implode. Just the time didnt arrive yet. Besides the products of Herbalife are not good and the clients give up using them.
    Time will show that Ackman was right and maybe Icahn will short it too.
    17 Nov 2013, 09:08 PM Reply Like
  • To me, looks like Biill Ackman is trying change the world. Didnt work with JCP, not working so far with Herbalife. I do not understand why he would get into GSEs though. The government has been talking for a while about reducing their size and even doing away with it. maybe its just me, but i dont see what Bill see in this trade. There are plenty of other opportunities out there.
    15 Nov 2013, 10:07 AM Reply Like
  • Ackman should consider a name change:Elon Musk Jr.
    15 Nov 2013, 10:30 AM Reply Like
  • No fire hopefully.
    15 Nov 2013, 11:42 AM Reply Like
  • does anyone know at what price Ackman bought its shares?
    15 Nov 2013, 10:54 AM Reply Like
  • Sure. From the filings listed in the link above:

     

    ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

     

    Pershing Square advises the accounts of PS, PS II, Pershing Square International, Ltd., a Cayman Islands exempted company (“Pershing Square International”) and Pershing Square Holdings, Ltd., a limited liability company incorporated in Guernsey (“PSH”) (collectively, PS, PS II, Pershing Square International and PSH, the “Pershing Square Funds”). Pershing Square purchased for the accounts of the Pershing Square Funds an aggregate of 115,569,796 shares of the common stock for total consideration (including brokerage commissions) of $264,981,966. The source of funding for such transactions was derived from the respective capital of the Pershing Square Funds.

     

    So, average price = $2.292 / FNMA share.
    Similarly, average price = $2.136 / FMCC share.
    15 Nov 2013, 11:16 AM Reply Like
  • Ackman paid between $1.50 and $2.97 it was in the report yesterday.
    He is probably buying more as we speak the upside has lots of room.
    The Obama admin has lost its clout and the curts will vote to give the company back to the stockholders after it gets paid back in full which is coming soon.
    15 Nov 2013, 01:47 PM Reply Like
  • You are truly right. Frannies are cmg back big time. Clearly the trend is now to have investors to own to mount the pressure and disallow the decision to wind them down. Berkowitz & companies already know this and had done excessive due dillegence with risks mitigations. Considering the huge profits, these stocks have huge potential. Will be in range of USD9/10 by end of this year, mark my words - see my other comments on other stocks.
    15 Nov 2013, 06:00 PM Reply Like
  • I say lets short congress
    15 Nov 2013, 11:08 AM Reply Like
  • What's the bid?
    15 Nov 2013, 08:53 PM Reply Like
  • This is one of the last post bailout plays and big money knows it, while Congress has no idea what to do. If Congress sits back and watch private enterprise maximize FNMA value, everyone will be better off. It would be a shame to see this opportunity turn in to Sallie Mae. I see $10 in Q2.
    15 Nov 2013, 11:42 AM Reply Like
  • Seriously, are FNMA and FMCC actually buyable? Or is it likely to be some kind of a trap?
    15 Nov 2013, 04:20 PM Reply Like
  • This from the guy who made losing bets on Realty Income, Herbalife, and JCPenney. Why would anyone follow in his footsteps?
    15 Nov 2013, 04:34 PM Reply Like
  • Would that be following Ackman, or Berkowitz?
    15 Nov 2013, 04:40 PM Reply Like
  • agreed, BTN. How is it that ackman has a job at all? I sold at $2.96 for a nice profit on a tiny trade, up from $2.35. I may have sold too early, but it was always a highly speculative gamble, and Ackman entering makes it easier to make the decision to sell.
    18 Nov 2013, 02:04 PM Reply Like
  • Lemmings come to mind.....................
    15 Nov 2013, 05:15 PM Reply Like
  • I have dumped information here ->
    http://bit.ly/1aJ1aS2
    15 Nov 2013, 08:52 PM Reply Like
  • Congress will not wind down FNF because now everybody knows that the companies are not the cause of the crisis but victims of the big banks. The loan performance is the real proof.
    The GSEs will remain as they are for ever. Government will end conservatorship, will exercise the warrants and will own 79.9% for ever. Dividends will be paid normally to shareholders of preferreds and in that way the lawsuits will be settled. Profits will be used to grow capital. Commons will benefit from the growing equity and the market value that will be back at 11 times earnings. Expect prices of $50 and more.
    16 Nov 2013, 08:48 PM Reply Like
  • Good point!.
    There are three other alternatives. A. Confiscate the entities, as is the present..
    B. Do some deal with Hedgies that wraps ownership only the insiders.
    C. Return the companies to stockholders after debt is repaid.
    Yours is the the second best after C. It may just work out since these entities are a public service enterprises.
    17 Nov 2013, 07:59 PM Reply Like
  • Dont wait until Buffett disclose a giant stake. Go shopping before these news hit the wires because then it will be too late!
    16 Nov 2013, 08:52 PM Reply Like
  • @retail investor

     

    I would say make any position a small one. This is not one for the ranch or the pension money. It is kind of bitcoin territory. Could go large, and just as easily go to near nothing.
    My observation in that it tends recently to go metoric and then collapse...although the base price is rising. so it went from 27 cents, up to 5 dollars, back to around 1 dollar, and somewhere above $2 seems to be a base now. Also, the new fund interest could make it different this time.
    However, like I say, treat with extreme caution, and, a 10% stop would be in order, as it can swing more than that, but when it turns, it really does seem to turn in a violent way.

     

    Good Luck
    20 Nov 2013, 04:11 AM Reply Like
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