Pershing Square’s presentation on Fannie Mae and Freddie Mac, titled "Promises Made, Promises Kept," outlines why the firm believes the GSEs’ value is set to rise.
Fannie and Freddie YTD Share Price Appreciation
Statements from President Trump and the administration have led Fannie and Freddie shares, which trade in the OTC market, to more than double in value this year
Institutional and Retail Ownership
Many institutional and retail shareholders have purchased Fannie and Freddie shares this year in anticipation of a public offering
- While disclosing ownership in OTC-listed securities is not required, several institutions have voluntarily reported ownership in Fannie and Freddie
- Institutions including Capital Group, Morgan Stanley, Aegon, Brighthouse Financial, and Banco Santander have increased their holdings of FNMA and FMCC since President Trump was re-elected
- Many institutions are precluded from investing in FNMA and FMCC shares since they are not listed on a major national exchange
- Many retail shareholders have also purchased shares in the GSEs
- The Reddit group “r/FNMA_FMCC_Exit” has 7,600 weekly visitors and 1,800 weekly contributions
- Widespread enthusiasm for Fannie and Freddie on platforms such as X and Truth Social
The Trump Administration’s GSE Objectives
- Maintain or enhance mortgage affordability
- Demonstrate mark-to-market worth to taxpayers
- Maximize long-term value for taxpayers
1. Maintain or Enhance Mortgage Affordability
“One, the structure of the U.S. mortgage market – we’re committed to making sure that there is no change in the spread of mortgages over Treasuries. We actually believe there are things that can be done to make mortgages cheaper for the American people. And then on the other side, these are tremendously valuable companies, and President Trump wants to realize some of the value.” - Treasury Secretary Scott Bessent, 8/27/2025
2. Demonstrate Mark-to-Market Worth to Taxpayers
“I think it's going to be sort of a, it could well be a this-year thing. Now, do we want to sell a lot? No, no. What we want to do is show a mark to market, right? That the President shows these are assets that we, the American taxpayers, own, and look how much they're worth, look how well they do. And what we want to do is keep the price of a home mortgage as low as mathematically possible. We don't want to take any action that raises that spread because that makes homeownership tougher, and we want to make home ownership easier.” - Commerce Secretary Howard Lutnick, 9/11/2025
3. Maximize Long-Term Value for Taxpayers
- President Donald Trump, 10/11/2025
Now is Not the Right Time to Sell
We do not believe that selling a portion of Treasury’s GSE shares in a public offering today is feasible or aligned with the Trump Administration’s objectives
- A share sale by Treasury while the GSEs remain in conservatorship is not feasible
- Institutions and retail investors were burned by both the 2008 bailout and the 2012 net worth sweep
- While in conservatorship, boards of directors “owe their fiduciary duties of care and loyalty solely to the conservator, and not to either the company or our stockholders”(1)
- Attempting a large secondary offering now would at best dilute taxpayer ownership at a significant discount to long-term fair value, or more likely result in a failed offering
- Accomplishing a significant stock sale at an attractive price would require the following actions followed by an exit from conservatorship
- Revise capital rule to allow the GSEs to earn adequate returns without raising g-fees
- Modify existing PSPAs to act as an ongoing, paid-for government backstop
- Codify and communicate regulatory powers that FHFA will retain post-conservatorship
- Recruit and incentivize world-class leadership and boards of directors at the GSEs
- The above actions will take significant time to deliberately execute
The Solution is Simple and Straightforward
- Account for the repayment of the Senior Preferred Stock (“SPS”)
- Exercise Treasury’s 79.9% warrants in both companies
- Relist Fannie and Freddie on the NYSE
- All three of these steps can be taken immediately by Treasury and FHFA
- Accounting for repayment of the SPS can be accomplished via a simple letter agreement between Treasury and FHFA
- Treasury may exercise its warrants to purchase 79.9% of the common stock of the GSEs for $0.00001 per share
- The GSEs meet all the NYSE listing requirements today and could re-list on the NYSE before exiting conservatorship, subject to approval by FHFA
- These steps enable the Trump Administration to achieve its GSE objectives
- Keeping the GSEs in conservatorship eliminates timing pressure, maximizes optionality, and gives Treasury and FHFA runway to plan a careful exit that avoids disrupting the mortgage market
- Relisting allows President Trump to deliver on his November 2025 timing commitment
We believe that this solution would result in taxpayers owning a 79.9% stake in the GSEs that would be worth over $300 billion
See the full presentation below.
