Activist investor Bill Ackman’s firm Pershing Square Capital Management is boosting its stake in both Fannie Mae and Freddie Mac to more than 11 percent in each from a combined 9.8 percent in both.
Ackman’s move comes a couple of weeks after the Senate Banking Committee announced an agreement on a legislation to wind down the mortgage financiers, but Ackman thinks the likelihood of the wind down is decreasing. Shares of Fannie Mae and Freddie Mac rose after the news.
A draft bill to wind down government-run mortgage financiers Fannie Mae and Freddie Mac would leave a decision on how to treat their private shareholders to the courts. The bill, written by South Dakota Democrat Tim Johnson and Republican Mike Crapo of Idaho, would replace the companies with a new industry-financed agency. The agency would provide a government backstop, but it would only kick in after private creditors took a hit.
The two agencies have returned to profitability and by the end of March will have sent the Treasury $202.9 billion in dividends.
Fannie Mae and Freddie Mac own or guarantee 60 percent of home loans in the United States.
—By CNBC. Reuters contributed to this report.