GSE Stocks Surge: Ackman Sees 10x Upside

Shares of Fannie Mae and Freddie Mac have climbed more than 60% since Oct. 14, 2026, through Monday's close. Both stocks gained approximately 3% on Tuesday, Nov. 3. This rally coincides with renewed calls from billionaire investor Bill Ackman to end the government's control over the two mortgage giants.

Fannie Mae and Freddie Mac have operated under federal conservatorship since September 2008. They were removed from the New York Stock Exchange in 2010 and have traded over the counter for the past 16 years. The entities purchase mortgages from banks and package them into mortgage-backed securities, a function critical to housing market liquidity.

Ackman, founder of Pershing Square Capital Management, holds stakes in both companies through his firm. In a shareholder letter issued on Monday, he projected that the stocks could increase 10-fold from their current prices if released from government control. He told CNBC's Squawk Box that the midterm elections may serve as a turning point for the issue. "The reason why it's not being touched right now is, you know, midterms," Ackman said.

President Donald Trump has publicly supported ending the conservatorship. Treasury Secretary Scott Bessent indicated the administration will address the ownership structure next year. Bessent told 2Way's The Morning Meeting podcast that the process could occur before Trump's term ends. He stated that housing affordability would guide the decision.

A primary obstacle is the Treasury Department's need to exit its roughly $388 billion ownership stake in the entities. This stake consists of preferred securities and warrants. The government must determine a strategy for selling or restructuring this position. Congress may also need to pass legislation to restructure the government's role in mortgage financing.

Market participants remain divided on the cost implications of a privatization. One point of controversy is whether ending the conservatorship would increase the spreads on mortgage-backed securities over Treasuries, making mortgages more expensive. Bessent has sought to reassure investors that this would not happen. "Whatever we do is going to be guided by making sure that the spread on agency mortgages over the Treasury does not increase," Bessent said.

Ackman argues that privatization would insulate the entities from political interference. He noted that in conservatorship, the president can influence operations. "In conservatorship, the president can do anything," Ackman said. He warned that political parties may push the entities to lower credit standards to expand homeownership, which could impact trillions of dollars in outstanding mortgage securities.