Activist investor Bill Ackman's company has disclosed stakes in mortgage giants Fannie Mae and Freddie Mac.
In regulatory filings today, Pershing Square Capital Management LP said that it has a 9.98 per cent stake in Fannie Mae and a 9.77 per cent stake in Freddie Mac.
Earlier this month Fannie Mae and Freddie Mac reported strong third-quarter earnings as the US housing market continues to recover. The government rescued Fannie and Freddie at the height of the financial crisis in September 2008 when both veered toward collapse under the weight of losses on risky mortgages. Together the companies received taxpayer aid totaling USD 187 billion.
The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans have helped make this year's federal budget deficit the smallest in five years.
The two companies don't directly make loans to borrowers.
They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available.
An activist shareholder uses an equity stake in a corporation to influence corporate decision-making.
