Investing.com — Fannie Mae and Freddie Mac saw a significant surge in their stock prices on Monday following statements made by renowned investor Bill Ackman. Ackman expressed his belief that President-elect Donald Trump is likely to privatize the two government-sponsored enterprises, potentially leading to their public listing around 2026.
As the billionaire founder of Pershing Square Capital Management, Ackman anticipates that Trump will remove Fannie Mae and Freddie Mac from government conservatorship, paving the way for their return to private ownership.
In a post on Monday, Ackman stated, “A successful emergence of Fannie and Freddie from conservatorship should generate more than $300 billion of additional profits to the Federal government (this is on top of the $301 billion of cash distributions already paid to the Treasury) while removing ~$8 trillion of liabilities from our government’s balance sheet.”
These two mortgage giants, responsible for funding home mortgages in the U.S., have been under government control since the 2008 financial crisis.
Ackman envisions Fannie Mae and Freddie Mac emerging from conservatorship within the next two years, potentially leading to their public stock market listing around 2026.
However, the privatization of Fannie and Freddie is expected to face scrutiny from Congress and will require legislative action.
Federal National Mortgage Association (OTC:) and Federal Home Loan Mortgage Corp (OTC:) closed 35% and 3% higher, respectively.