Billionaire investor Bill Ackman, founder and CEO of Pershing Square Capital Management, is advising the Donald Trump administration against rushing initial public offerings (IPOs) for mortgage giants Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC).
Ackman’s A Warning Against Rushing IPOs
Instead, Ackman unveiled a three-step reform plan on Fox Business‘ “Mornings with Maria” that he claims would secure “hundreds of billions of dollars in value” for taxpayers.
“Rushing to IPO is a mistake,” Ackman stated, adding, “We think they are worth a lot more.”
He outlined his approach, starting with the Treasury acknowledging past payments, then exercising warrants to take a 79.9% common stock ownership, and finally, relisting both companies on the New York Stock Exchange.
This strategy, he believes, would allow the market to properly value them, potentially reaching a “400-billion-dollar market cap.”
Preparing For Public Listing
Ackman highlighted the need for careful preparation before a public offering. He referred to the Barack Obama administration’s “net worth sweep” as “theft,” which he said Secretary Steven Mnuchin “stopped,” enabling the companies to rebuild capital.
However, Ackman stressed that “a lot of steps needed to be taken” before an IPO, including resetting capital levels and putting the “right teams in place.”
He warned against disrupting the “fragile” mortgage market by rushing such a significant transaction.
See Also: Billionaire Bill Ackman Set To Unveil New Proposal For Fannie Mae and Freddie Mac
Protecting The Mortgage Market
Ackman’s plan aims to avoid widening mortgage spreads, which could happen with an uncertain, rushed IPO. He proposes keeping the entities in conservatorship while listing them on the NYSE, offering “the best of both worlds” – zero risk of spreads widening and potential for narrowing.
This measured approach, he contends, aligns with the President’s ambition to demonstrate value creation for taxpayers, projecting a much higher valuation than previous estimates.
Economic Outlook & Social Policy
Beyond Fannie and Freddie, Ackman expressed broader optimism for the U.S. economy, citing “massive AI investment,” deregulation, and tax reforms as significant tailwinds.
He also touched on social issues, passionately advocating for all Americans to participate in capitalism through initiatives like universal 401(k) plans, to combat growing wealth disparity and resentment that “leads to socialism.”
The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher on Thursday, after advancing on Wednesday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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