Bill Ackman is on the attack again, and this time, the target is the U.S. government. We thought Herbalife (HLF) was worried with Bill Ackman’s constant onslaught against the company in attempts to “prove” it is a Ponzi scheme, which, no doubt, would help his challenged and generous short position. The overactive activist investor has even alleged that Allergan (AGN), in which he has a substantial stake, is pursuing a “scorched Earth policy” to ward of a takeover from Valeant (VRX). Now Ackman is taking on no less than the U.S. government over Fannie Mae (FNMA) and Freddie Mac(FMCC); Ackman’s Pershing Capital is the dominant shareholder in both insurers.
The government’s takeover of Fannie and Freddie during the Great Recession in 2008, allegedly strips shareholders of “any economic value in their shares, ” according to Pershing Square. Ackman goes on to allege that the government agreed to strip all profits from both companies in the bailout. Pershing Square attorney, Laurence Rosenberg, believes this could even violate the 5th Amendment, “which prohibits taking private property for public use without just compensation.”
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Taxpayers bailed out Freddie and Fannie to the tune of $187 million. In the ensuing years, the companies sent over that sum back to the Treasury Department, but those extra amounts were considered as return on the U.S. government’s investment. Ackman and shareholders are crying “foul.”
Perhaps Ackman has a stronger case about Freddie and Fannie than he has with Herbalife, but for those who have followed Ackman in the news, it feels like he’s never quite happy on any given week unless he’s on a the warpath.