Published On: Wed, Oct 15th, 2014

Fannie and Freddie Are Back, But So Is Bill Ackman

BILL ACKMAN screen shot

Shares of Fannie Mae and Freddie Mac tumbled dramatically after Judge Royce Lamberth tossed out lawsuits file by hedge fund managers Bill Ackman, Richard Perry and others that the government did not give shareholders in the mortgage insurers a fair shake when they took them over in a temporary bailout during the recession, reports Forbes. Both Fannie and Freddie have paid back the $188 million of the bailout in full and are generating profits. Hedge fund managers who owned significant stakes in the companies think they were not adequately compensated by the government.

However, Fannie and Freddie have bounced back, erasing much of their losses from judge Lamberth’s decision. They were up 49% in spite of a weak market recently. However, the stocks that rose were the common shares. The preferred shares, which are more widely held by fund managers have risen only 1%. This isn’t great news for Richard Perry and Bruce Berkowitz, but Bill Ackman is getting excited, since he has a significant stake in the common shares, and as usual, is vowing revenge. He says the courts have not seen the last of him on this issue and vows to fight the decision. In fact, Ackman is so sure of a victory, he bought more common shares. Perhaps others followed suit, because one can’t say Ackman never loses, he is certainly the warlord of attrition, given his record with Herbalife and Allergan,

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