Multi-millionaire Bill Ackman Believes Donald Trump Could Boost These Two Stocks Significantly – Both Already Saw a 6X Increase in Value within the Past Year
Billionaire Bill Ackman, known for his activist investing strategies, still isn't shy about attempting to influence corporate decisions that could benefit his hedge fund. Recently, he's set his sights on two stocks in his portfolio – Fannie Mae and Freddie Mac – and believes that President-elect Donald Trump could help turn these into major wins. Already delivering returns of over 6x in the past year, Ackman is hopeful that a second Trump term will see these government-sponsored enterprises (GSEs) soaring even higher.
Fannie Mae and Freddie Mac are both GSEs, created through acts of Congress yet privately held. Established in 1938 and 1970 respectively, these entities provide crucial financial services benefiting the public without lending directly to borrowers. Instead, they back mortgage securities and issue mortgage-backed securities to investors.
Ackman sees potential for the GSEs to perform exceptionally well in the context of a second Trump administration, suggesting that conservatorship could eventually end. This trend reversal, as seen from the last 12 months, has already caused share prices for both Fannie Mae and Freddie Mac to jump significantly – by 540% and 600% respectively. Ackman believes that his hedge fund and other investors could stand to benefit from a potential IPO in 2026, with price projections around $34 per share.
A successful release from federal conservatorship could yield significant profits for the government, according to Ackman, potentially surpassing $300 billion. By alleviating $8 trillion in liabilities, it would also generate positive momentum in improving the U.S. government's balance sheet.
Despite the exciting possibilities, a few hurdles would need to be handled for this to become a reality. These could include political pressures, regulatory challenges, and market assessments about the potential impact of a GSE release from conservatorship. In addition, substantial equity issuances may be required, potentially diluting existing shareholders and leading to more moderate returns.
Bill Ackman's optimism regarding GSEs is fueled by his expectation that a second Trump term could further prioritize privatization. Given the significant risks yet potential rewards, the investment community will be closely watching the evolution of Fannie Mae and Freddie Mac as the political landscape shifts, with a bias towards growth in this sector.
Given Bill Ackman's belief in a potential IPO for Fannie Mae and Freddie Mac in 2026, he is actively investing in these stocks, hoping to benefit substantially from the expected price increase. In light of this, many financial institutions are considering allocating resources towards this sector, recognizing the significant potential returns in finance.
As Ackman continues his strategic investing, he emphasizes the importance of navigating the political and regulatory challenges that may arise, understanding that potential equity issuances might impact current shareholders and returns.