'Insanely cheap': what does billionaire Bill Ackman advise buying on a drawdown?
Investor Bill Ackman thinks Fannie Mae and Freddie Mac mortgage stocks are undervalued / Photo: hls.harvard.edu / Tracy Tolf
The gap between the market price and the fundamental value of assets due to the war in Iran has created one of the most attractive entry points into safe stocks in years, said billionaire and founder of Pershing Square Capital Management Bill Ackman. He urged investors not to dwell on fears but to seize the opportunity to buy such assets at a discount.
What Eckman advises you to buy
The market is at "one of the best times in a long time" to buy quality assets, Ackman wrote on social media X.
"Some of the highest quality companies in the world are trading at extremely low prices. Don't listen to the media. This is one of the most unequal wars in history that will end well for the U.S. and for the world. And we have the potential for a significant peace dividend. This is one of the best times in a long time to buy quality assets. Ignore the "bears."
In particular, the Pershing Square founder singled out U.S. mortgage giants Fannie Mae and Freddie Mac, calling them "insanely cheap" and capable of delivering disproportionately high returns in a relatively short period of time. Both securities are down about 40% since the beginning of the year, including after iconic short-seller Michael Burry wrote that he doesn't expect the companies to go public until 2027 at the earliest.
In trading on Monday, Fannie Mae shares jumped 42.5% and Freddie Mac shares jumped 38%. Both securities are now traded on the US over-the-counter (OTC) market.
Context
Ackman has a track record of making lucrative deals amid major macroeconomic events - he made billions during the coronavirus pandemic, Barron's writes - but the billionaire has a vested interest in promoting the end of war and market growth: Ackman could use a change in market sentiment as he seeks to take Pershing Square public in the U.S. with a new fund that is likely to focus heavily on large technology companies, the publication notes.
The Ackman Foundation also owns a significant stake in Fannie and Freddie - more than 210 million shares. The mortgage giants have been under government control since the 2008 crisis. Donald Trump's team has long discussed removing the companies from oversight through a public offering, but so far no decision has been made. The lack of clarity in the administration's plans hit quotes hard, Bloomberg notes. Eckman, in turn, promotes the idea of "immediate" placement of mortgage giants on the New York Stock Exchange instead of a longer preparation for IPO. In November, he addressed a petition to the White House.
From the beginning of the year through last Tuesday, the securities of Pershing Square Holdings, the company's closed-end fund traded in London, were down 19%, according to data on the fund's website. On March 10, Pershing Square filed paperwork to list on the New York Stock Exchange under the ticker PS. The move will give public investors direct access to a concentrated portfolio of large companies in which the firm invests. The listing will effectively turn Ackman's investment structure into a permanent capital model - modeled after Warren Buffett's Berkshire Hathaway, CNBC explains.
This article was AI-translated and verified by a human editor
