Billionaire investor Bill Ackman just did something unusual. He publicly recommended buying stocks—something he rarely does. And his pick? Fannie Mae and Freddie Mac, two companies that have been stuck in government limbo since the 2008 financial crisis.
I am often asked for stock recommendations, but generally don’t share individual names unless I believe the risk versus the reward is extraordinarily compelling.
— Bill Ackman (@BillAckman) December 30, 2024
As we look toward 2025, one investment in our portfolio stands out for large asymmetric upside versus downside so I…
The $10 billion “lottery ticket”
Now, this isn’t a new position for Ackman. He’s been holding these stocks for over a decade. But 2025 turned out to be a jackpot year. His Fannie and Freddie positions became his most profitable holdings, reportedly doubling his net worth. His stake could now be worth a staggering $10 billion—roughly half the size of his entire hedge fund.
So what’s changed? Why is Ackman suddenly so confident about these “zombie” companies that have been in government conservatorship for 17 years?
Before we dive into Ackman’s bet, let’s understand what these companies do.
‘From “widow maker” to “must-own”: The business model
Fannie Mae and Freddie Mac don’t give you home loans directly. Instead, they buy mortgages from banks, package them into securities, and sell them to investors. This keeps money flowing in the housing market and helps keep mortgage rates affordable. Together, they back about 70% of all U.S. home loans.
During the 2008 financial crisis, both companies nearly collapsed. The government had to step in, taking control and pumping in billions to save them. In return, the Treasury got senior preferred stock and warrants, giving it significant ownership rights.
For years, Fannie and Freddie had to pay all their profits back to the government. But since 2019, they’ve been allowed to keep their earnings and rebuild capital. They’re now wildly profitable again, yet they remain in conservatorship—a supposedly temporary arrangement that’s lasted nearly two decades.
Ackman’s evolving strategy
Initially, Ackman bought these stocks as a contrarian bet that they’d eventually be released from government control and go public. For years, the stocks traded sideways. But with Donald Trump’s return to the White House, things started moving.
In August 2025, the Federal Housing Finance Agency director hinted at a possible IPO. That’s when things got interesting. Shares surged more than 15% after Ackman pitched his plan at the White House in November.
But here’s the twist: Ackman has changed his approach. He’s no longer pushing for an immediate full-scale IPO or even a merger of the two companies. Instead, he’s advocating for a simpler first step—getting Fannie and Freddie relisted on the New York Stock Exchange.
Why? Because many institutional investors are prohibited from buying over-the-counter stocks. An NYSE listing would open the floodgates to major institutional money, potentially driving prices much higher.
Ackman believes Fannie and Freddie are massively undervalued, trading at just 2.5 to 3.5 times earnings. He originally predicted IPO prices around $34 per share. Currently, Fannie Mae trades around $10.60, so there’s potentially significant upside if his thesis plays out.
Michael Burry joins the party
If Ackman’s endorsement wasn’t enough, Michael Burry—the legendary investor who predicted the 2008 housing crash—announced in December 2025 that he too holds “good size” positions in both companies.
The irony is delicious. Burry famously bet against these very institutions in 2008, profiting from their collapse. Now he’s betting on their resurrection. In a 6,000-word blog post, Burry outlined why he believes a relisting is imminent and projected shares could trade at 1.5 to 2 times book value within one to two years.
The Trump administration factor
What’s giving both investors confidence is the apparent commitment from the Trump administration. Treasury Secretary Bessent, Commerce Secretary Lutnick, and FHFA director Pulte have all made bullish statements about taking the companies public, with timelines pointing to Q1 2026.
The administration is also exploring broader housing reforms, including potentially declaring a National Housing Emergency to help young people afford homes. An IPO could generate around $30 billion for the government by selling just
Go for the top idea for 2026?
Even though Bill Ackman has a very successful track record when picking stocks, one should always do their home work and/or consult their advisors before investing in any stock.
In this instance, even though Bill makes a strong case, it is clear (and Bill makes it clear too) that he has a stake in the company. So, his view is not independent.
So, go ahead and dig deep into the two companies. And see if there is an opportunity here that’s worth exploring. For 2026, and beyond.
Sonia Boolchandani is a seasoned financial writer She has written for prominent firms like Vested Finance, and Finology, where she has crafted content that simplifies complex financial concepts for diverse audiences.
Disclosure: The writer and her his dependents do not hold the stocks discussed in this article.
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