Billionaire Bill Ackman Says Trump’s Plan To IPO Fannie Mae and Freddie Mac Soon Is ‘Not Feasible’

Billionaire hedge fund manager Bill Ackman has criticized the Trump administration's plan to sell shares of mortgage giants Fannie Mae and Freddie Mac to the public, laying out an alternative path that would reward existing common shareholders.

Ackman, whose Pershing Square hedge fund holds a substantial stake in Fannie and Freddie's common stock, unveiled an alternative proposal in a presentation Monday, outlining three steps he says the Trump administration could take to accomplish relisting on the New York Stock Exchange in a matter of days.

However, the billionaire opposes the Trump administration's plan for an initial public offering by selling government-owned shares to the public, saying that it could lead to a “failed public offering” or a "price well below the intrinsic value.”

“We do not believe that a sale of a piece of Fannie and Freddie to the public is either feasible or really desirable at this moment in time,” he said in a video presentation on X.

In May, President Donald Trump said he was "giving very serious consideration to bringing Fannie Mae and Freddie Mac public" and has continued to tease an IPO, although details of the plan and the timeline have remained scant.

Fannie and Freddie, created by Congress to bring stability and liquidity to the mortgage market, were publicly traded for years until the 2008 financial crisis, when they entered federal conservatorship under a bailout deal.

Since then, the Federal Housing Finance Agency has exercised total control over the operation of the companies, and an Obama-era rule known as the "net worth sweep" has directed all of their profits to the U.S. Treasury since 2012.

Although common shares of the companies have continued to trade over the counter, the conditions of the conservatorship rendered them virtually worthless, and the shares traded at around 1% of their former value for many years.

Ackman says his plan would provide a windfall to holders of those common shares (including himself), estimating the two stocks would trade about 300% higher on a regulated exchange. Meanwhile, the government would retain an equity stake he estimates would be worth $300 billion.

The billionaire's plan requires three steps that he argues the Treasury and FHFA could take "immediately."

First, the Treasury would issue a letter formally acknowledging that Fannie and Freddie have satisfied the repayment conditions of the Senior Preferred Shares (SPS) the companies issued during the bailout. That's fair, says Ackman, because the government has recouped all of the money it injected in the companies, plus about $25 billion more.

Second, the Treasury would exercise warrants allowing it to purchase 79.9% stakes in both companies. For Ackman, this route is vastly preferable to converting the SPS to common stock, which would all but wipe out the equity of existing common shareholders.

Third, FHFA would authorize Fannie and Freddie to relist on the NYSE. Ackman says the companies already meet listing requirements, and says that NYSE officials are prepared to move forward with a relisting.

Spokespersons for the Treasury, FHFA, and the NYSE parent company Intercontinental Exchange did not immediately respond to requests for comment Tuesday on Ackman's proposal.

Ackman estimates that the combined market capitalization of Fannie and Freddie would be about $421 billion on Dec. 31 under his plan, valuing the government's 80% stake at some $310 billion.

That valuation is significantly less than the $1 trillion valuation that Trump has reportedly eyed with plans to sell 5% to 15% of the companies' government-held shares to investors.

But Ackman argues that by moving too quickly toward an IPO, the administration risks undervaluing the companies and failing to address key legal and financial requirements for a successful offering.

"We think that there are a number of things that need to happen in order for these [companies] to have a successful public offering," he says.

Ackman says those steps include reforming the stringent capital requirements the companies currently operate under, clarifying what powers FHFA would retain post-conservatorship, and ending the government conservatorship before an IPO.

For homebuyers, Ackman's proposal would likely have little effect on the mortgage market if the Trump administration were to follow his suggestions, says Realtor.com® senior economist Joel Berner.

"This proposal would allow retail investors to get a piece of this action, but would not remove the essential government guarantees that make Fannie and Freddie reliable," he says. "The impact to the housing market would probably be minimal, unless the logistics of the transition create temporary costs that get passed along to mortgage originators and thereby to homebuyers in the form of higher mortgage rates."