Bill Ackman Raises Fannie & Freddie Stakes ~ market folly

Monday, March 31, 2014

Bill Ackman Raises Fannie & Freddie Stakes

Bill Ackman's hedge fund firm Pershing Square Capital has filed amended 13D's regarding Federal National Mortgage Association, or Fannie Mae (FNMA) as well as Federal Home Loan Mortgage Corp, or Freddie Mac (FMCC).

Per the filings, Ackman's hedge fund now owns around 9.98% of FNMA with 115,569,796 shares.  But they also have additional aggregate exposure via cash settled total return swaps.  This exposure amounts to around 15.4 million notional shares.  So in total, Pershing's aggregate ownership is around 11.31%.  UBS is the counterparty for the swaps.

Additionally, Pershing's new swap exposure to FMCC equates to over 8.4 million notional shares.

Other prominent investors are involved as well.  Bruce Berkowitz's Fairholme Capital owns preferred securities on both names.

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