Just a day after Bill Ackman’s Pershing Square reported its 13F for third quarter, which didn’t have a lot of news, the hedge fund filed a couple of major bombshell 13Ds, showing an activist stake in Federal Home Loan Mortgage Corp (OTCBB:FMCC) a.k.a. Freddie Mac and Federal National Mortgage Association (OTCBB:FNMA) a.k.a. Fannie Mae. Pershing Square Capital management holds 63,505,693 shares of the Freddie Max, which amounts to a 9.8% stake and 115,569,796 shares of Fannie Mae, roughly 10% stake.
The stake is unusual for Ackman, who has previously spoken rarely about the hotly debated recapitalization of the government-owned lender but rightly timed as talk of a sale of the mortgage lenders is making these two very popular stocks.
The 13D further details that Pershing bought a position in the company, after Bruce Berkowitz highly publicized opinion on the company’s preferred shares. Berkowitz has spoken on several occasions about how Fannie Mae and Freddie Mac should return to shareholders, very recently there has been talk that Fairholme could buy parts of Federal National Mortgage Association (OTCBB:FNMA) a.k.a. Fannie Mae and Federal Home Loan Mortgage Corp (OTCBB:FMCC) a.k.a. Freddie Mac, through a refinancing plan.
“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 concerning the business, assets, capitalization, financial condition, operations, governance, management, strategy and future plans of the Issuer.”
Pershing Square Capital bought common stock of Freddie Mac and Fannie Mae between Oct 7- Nov 14. Shares of FMCC and FNMA have gained over 1000% YTD. Both are up over 10% on the news of Ackman’s stake now.