MarketsJan 18, 2025
Bill Ackman Is Ready For His Decade-Long Bet On Government-Supported Enterprises Fannie Mae and Freddie Mac To Pay Off — But First, He Has To Convince Trump
Policy Arbitrage
Noah Weidner
Discover
Last year, Billionaire investor Bill Ackman tried to take a page out of Warren Buffett’s book by launching his own version of Berkshire Hathaway, aiming to ride his newfound popularity as a social media politico to new heights — and to the bank. But the tumultuous rollout of that ETF and comments by Ackman’s own hedge fund advising shareholders to “ignore” what he says have called into question what game he’s really playing. Is he an investor or a politician? We might be about to find out.
Influencer first, investor second? Ackman’s Pershing Square hedge fund has lost half of its assets since 2015. And despite a remarkable 2023, the fund returned to its pattern of underperformance in 2024, returning just 10.2% last year. It could’ve been even worse if not for some last-minute tweeting. In the waning hours of 2024, Ackman took to Twitter to sell one of his longtime, languishing investments — the government-supported housing authorities Fannie Mae and Freddie Mac.
They say insanity is doing the same thing over and over again, so what makes Ackman’s thesis different this time? In a word, Trump. For a decade, Ackman’s roots in activist investing meant winning over shareholders and influencing executives to make big changes. But in pursuing his Fannie and Freddie obsession, he’s becoming a new kind of activist — a political one.
Seeing it through: Ackman calls his Freddie and Fannie trade an investment that “stands out for large asymmetric upside.” According to Bloomberg, Ackman is already up more than 1,200% on his trade, netting a $1B profit. That’s a massive win for an investor who has struggled with stock-picking in recent years — and a nice last-minute bump for the fund after a disappointing 2024. But to fully realize the value of Fannie and Freddie, he’ll have to win over incoming government officials, who are already committed to a hefty slate of economic policies. Worst case, maybe the DOGE will hear what he has to say.
