May 5, 2014 / 8:41 PM / 4 years ago

UPDATE 1-Ackman recommends Fannie Mae, Freddie Mac at Sohn conference

(Adds details from presentation, stock price moves)

NEW YORK, May 5 (Reuters) - Activist investor William Ackman said on Monday he recommends the shares of mortgage finance giants Fannie Mae and Freddie Mac because the companies have low liquidity risk.

Ackman, speaking at the Sohn Investment Conference in New York, said the shares of the companies, both of which are now trading around $4 a share, could be worth $23. A better case would be for them to trade around $47 a share, he said.

Shares of Fannie Mae rose 3 percent and shares of Freddie Mac jumped 6.3 percent.

Ackman is one of the industry’s most closely watched investors. The flagship fund of his Pershing Square Capital Management is up 19 percent this year, handily beating most rival hedge funds.

Pershing Square has owned common shares of both Fannie and Freddie since late last year.

Regulators took control of the two companies in 2008 after losses stemming from subprime mortgage investments pushed them to the brink of insolvency.

Both companies, the two largest suppliers of mortgage funds, are operating under conservatorship while Congress considers an overhaul of the mortgage-finance system. The Senate is considering taking action to wind down the two taxpayer-owned companies, but the measure faces an uncertain future.

At the end of the presentation, Ackman told investors that it is time “to get off our Fannie.” (Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below