From Nasdaq: 2025-01-04 18:23:00

President-elect Donald Trump’s potential policies have investors optimistic about the stock market, with expectations of deregulation and tax cuts boosting sentiment. Billionaire investor Bill Ackman sees significant upside potential for two of his long-held investments, Fannie Mae and Freddie Mac, under the incoming administration. The government-sponsored entities have been under conservatorship since 2008, with recent moves hinting at a possible exit. Ackman believes the GSEs could raise capital, retire preferred stock, and see substantial gains for shareholders, projecting an 888% and 909% upside for Fannie and Freddie, respectively.

While the path to exiting conservatorship for Fannie Mae and Freddie Mac seems promising, there are significant risks and uncertainties involved. Ackman’s optimistic scenario relies on various assumptions, including the Treasury’s actions regarding preferred stock and capital requirements. Investors considering these stocks should proceed cautiously, understanding the potential variables at play and the complexities of the situation. Additionally, investing in junior preferred shares, which trade at a discount, may offer a less risky alternative with still significant potential upside.

If you’re contemplating investing in Federal National Mortgage Association, it’s essential to weigh the risks and rewards carefully. While Ackman sees substantial potential for Fannie and Freddie, other investment opportunities may offer better returns in the long run. Consider consulting with financial experts and exploring alternative options before making any investment decisions to ensure a well-informed choice.



Read more at Nasdaq: Billionaire Investor Bill Ackman Thinks 2 Stocks Could Soar Roughly 900% Under the Incoming Trump Administration