Bill Ackman and Michael Burry are backing two stocks with significant regulatory and political risk, but potential for massive growth. Their high conviction in these stocks is tied to the Trump administration’s ability to make game-changing decisions. Fannie Mae and Freddie Mac play crucial roles in the mortgage market, backed by a government guarantee following the Great Recession.

The government injected over $187 billion into Fannie Mae and Freddie Mac during the recession, leading to a controversial “net worth sweep” agreement. Trump’s administration aims to release the GSEs from conservatorship, with Fannie generating substantial profits. An IPO could help close the capital gap, but concerns about dilution and mortgage rate increases linger.

Burry holds a large position in Fannie and Freddie, expecting significant growth post-IPO. Ackman believes the GSEs could be worth $400 billion collectively, offering a risky yet potentially rewarding investment opportunity. The Trump administration’s support is crucial for GSEs’ release, but political and regulatory challenges remain.

Read more at Yahoo Finance: Wall Street’s Top Investors, Like Bill Ackman and Michael Burry, Are Betting on 2 Stocks That President Donald Trump Could Help Turn Into Multibaggers