Bill Ackman gets back into activism
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Hedge fund manager Bill Ackman. Photo: Sylvain Gaboury/Patrick McMullan via Getty Images
In the latest iteration of Bill Ackman's activist investing career, the billionaire hedge fund manager is using the power of his 1.5 million followers on X to try to influence one man in particular: Donald Trump.
Why it matters: The president-elect is very likely to both create and destroy fortunes by executive decree.
- Huge sums of money can therefore be made if it's possible to influence Trump's actions — and social media has supplanted Fox News as the medium of choice by which to reach him.
Driving the news: Last week, Ackman laid out a thesis for how he thinks the government should exit its positions in Fannie Mae and Freddie Mac, the so-called government-sponsored enterprises (GSEs). Such an action, he said, would benefit shareholders in the two companies, including himself.
- Ackman has held this thesis — and this position — for over a decade, during which period very little progress has been made toward releasing the GSEs back into the private sector. Nevertheless, Ackman hasn't given up hope.
- Being sure to tag the president-elect in his tweet, Ackman wrote: "I expect that in the second @realDonaldTrump administration, Trump and his team will get the job done."
- Ackman will go public with a more detailed presentation of his thesis next week, per a source familiar with the matter.
The big picture: For the past few years, Ackman has been unusually quiet as an investor.
- As he explained in a letter to investors in 2022, his investment firm Pershing Square graduated successively from Pershing 1.0, where he used the "transactional activism" playbook to push companies to take actions that would juice the stock price, to Pershing 2.0, where he joined the board and took more direct control of medium-sized companies like General Growth, to Pershing 3.0, where he takes a more passive stake in larger companies.
Where it stands: Ackman's approach to his position in the GSEs is reminiscent of Pershing 1.0, but in this case, rather that seeking to pressure the board or the management of the companies he's investing in, Ackman is looking instead to get the president of the United States to act in accordance with his wishes.
- Ackman is aided in this quest by the power of his X account writ large, which in recent months has become loudly pro-Trump and pro-MAGA.
Between the lines: The details of any plan to release the GSEs from government control get fiendishly complicated very quickly, as technocrats argue over such issues as liquidation preferences, credit risk transfer instruments, and corporate credit ratings. The result has been a quagmire and a continuation of government ownership for much longer than originally intended.
The bottom line: Almost everybody in Trump's orbit likes the idea of releasing the GSEs in theory.
- The big question is whether Ackman can persuade the president that the government's fiscal balance — which includes hundreds of billions of dollars owed by the GSEs to the Treasury Department — is a function of bad accounting, and that the money borrowed should be considered to have already been repaid in full.
