Bill Ackman, founder of Pershing Square Capital Management, said he's added "meaningfully" to his bets on U.S. mortgage companies Fannie Mae and Freddie Mac in the past two weeks.
His New York-based hedge fund firm is wagering that Congress or the courts will restore value to Fannie Mae and Freddie Mac securities after the companies were seized by regulators in 2008. Securities in both plunged after a federal judge threw out a lawsuit on Sept. 30 that would have forced the government to share the companies' profits with private investors.
"The government cannot act outside the law," Ackman said in an interview on Bloomberg Television. "This is a decision that will never stand."
Fannie Mae's common stock rose 6.8% to $2.21 at 11:09 a.m. in New York, still 18% less than at the end of September. Freddie Mac shares rose 8% today to $2.15.
Ackman, whose Pershing became the largest holder of the stocks behind the U.S. government, has predicted the shares could be worth $40 to $50.
