Fannie Mae shares surged 11% and Freddie Mac gained 8% on June 25, extending a rally in housing finance stocks as investors bet on progress toward ending the federal conservatorship. The moves come as Bill Ackman's Pershing Square USA fund holds positions in both government-sponsored enterprises.
Fannie Mae surged 11% and Freddie Mac gained 8% on June 25, extending a rally in housing finance stocks as speculation built over the GSEs' future.
"The stocks remain stupidly cheap relative to their potential value post-conservatorship," Bill Ackman, founder and chief executive officer of Pershing Square Capital Management, said in a March post on X. Ackman's Pershing Square USA fund, which began trading on the New York Stock Exchange in April, holds positions in both companies.
The rally pushed Fannie Mae shares to around $7, recovering from a 40% year-to-date decline through early June when the stock traded at $6.34. Freddie Mac followed with an 8% advance. The gains outpaced the broader homebuilder sector, where the Zacks Building Products - Home Builders industry has risen 4.8% over the past four weeks.
The surge reflects growing investor conviction that the federal conservatorship — in place since 2008 — may be nearing resolution. Any progress toward privatization would unlock substantial value for common shareholders, though Wedbush analyst Henry Coffey has cautioned that release is likely delayed past the November midterm elections. Coffey cut his Fannie Mae price target to $8 from $13 and Freddie Mac's to $12 from $13.35 in a March research note.
Mortgage rates have eased to 6.47% from 6.52% a week earlier, according to Freddie Mac data, providing a tailwind for housing-related equities. The Federal Reserve held its benchmark interest rate at 3.5%-3.75% at its most recent meeting, supporting confidence in the housing sector.
For Pershing Square, the GSE positions represent a decade-long bet. Ackman first invested in Fannie Mae and Freddie Mac more than 10 years ago and has maintained the conviction through multiple false starts on conservatorship reform. The fund's inclusion of both stocks in PSUS shows how central the thesis remains to his strategy.
The broader housing market remains mixed. The S&P CoreLogic Case-Shiller Seattle Home Price Index fell 1% in March, its third consecutive monthly decline, while active listings across the Northwest Multiple Listing Service area rose 16.8% year over year in May to more than 21,000 homes. Thirty-year mortgage rates stood at 6.53% at the end of May, according to Freddie Mac data.
This article is for informational purposes only and does not constitute investment advice.
