In August 2025, after President Trump repeated his preference for partially privatizing government-sponsored mortgage enterprises Fannie Mae and Freddie Mac, some significant government and business leaders responded.
Federal Housing Finance Agency (FHFA) director — and Fannie Mae and Freddie Mac chairman — Bill Pulte hinted on X that an Initial Public Offering (IPO) could be in the works for late 2025.
Pershing Square Capital Management founder Bill Ackman suggested a merger of the two companies.
Related: Fannie Mae predicts major mortgage rate change coming soon
“One way to reduce mortgage rates would be to merge Fannie and Freddie,” Ackman wrote on X on August 10. “A merger would enable them to achieve huge synergies both in their operations and in the trading price and spreads of their MBS (mortgage-backed securities), savings which could be passed along to consumers in the form of reduced mortgage rates.”
“A merger would also reduce the cost and risks of government oversight as there would be only one institution that would require FHFA oversight,” he added.
In a Pershing Square presentation — and question and answer session — on Nov. 18, Ackman seemed to backpedal from suggestions of both an IPO and a merger for Fannie and Freddie, and he raised an alternative solution.
Bill Ackman eyes different fix for Fannie Mae, Freddie Mac
Plans for a potential IPO involving Fannie Mae (FNMA) and Freddie Mac (FMCC) have explored two paths: combining the firms into a single entity or keeping them independent.
No decision has been finalized, and analysts caution that a merger would be highly complicated and fraught with obstacles.
Since the 2008 financial crisis, both companies have operated under federal conservatorship. Together, they back roughly 70% of U.S. home loans, underscoring their critical role in the housing finance system.
The Trump administration has suggested an offering that could generate around $30 billion by selling 5–15% of the companies’ shares to investors. Market observers estimate that, taken together, Fannie and Freddie could be valued at more than $500 billion — placing the deal among the largest IPOs ever contemplated.
“I do not think it makes sense to merge the two companies,” Ackman said Nov. 18. “While they are in a very dominant position, I think it’s helpful that they are two separate businesses that have to compete.”
“I think that participants in the mortgage market don’t want to deal with a monopoly,” he added.
Bill Ackman explains why Fannie, Freddie action will not be IPO
Ackman emphasizes that the Fannie Mae and Freddie Mac proposal is different than an IPO.
“Both Fannie and Freddie are already public companies. An IPO is an initial public offering and I think in this case, it’s been sort of a terminology that’s been used that’s a little, actually, inaccurate,” Ackman said. “What the government’s been talking about is actually a secondary sale of a portion of their interest in the two enterprises in connection with a listing of the companies back on the New York Stock Exchange (NYSE).”
“What we’re suggesting is, now is not the right time to sell,” he added. “These entities are growing in value in a very significant way. There are significant opportunities for optimization for better management of these enterprises.”
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Ackman clarifies that a lot needs to be done to remove uncertainty.
“By taking this, if you will, almost a baby step, what this will do is create a lot of visibility around the company and it will open the market for Fannie and Freddie stock to a much broader group of investors,” he said.
“Now, there’s a limited universe. Many institutions are not permitted by a kind of mandate to invest in over-the-counter (OTC) listed securities.”
Fannie Mae and Freddie Mac are currently traded on the OTC market.
“So what we’re really talking about is relisting them on the exchange, and that, in our view, is going to have a very significant positive effect on the trading value of the two companies,” Ackman said.
Ackman believes Fannie and Freddie are currently vastly undervalued.
“They’re trading at two-and-a-half to three-and-a-half times earnings,” he said. “These are effectively duopolistic growth companies that own royalties on the U.S. mortgage system. These are businesses that are like infrastructure companies, that you traded infrastructure like growth multiples.”
“And I think we’ll take a very significant step in the direction if the administration carries this forward.”
Ackman’s steps to quick action on Fannie Mae, Freddie Mac
- Ackman stated that an IPO for Fannie Mae and Freddie Mac would require significant time and careful execution.
- He emphasized that gaining support from market participants is a critical part of the process.
- He suggested that Trump could accelerate the timeline by restoring trading of the two enterprises on the New York Stock Exchange.
- He proposed that the Treasury exercise its 79.9% warrants in both companies.
- He also recommended accounting for repayment of the senior preferred stock.
- When the government placed the companies in conservatorship in 2008, it received senior preferred shares and warrants to purchase up to 79.9% of their common stock.
- Ackman argued that a NYSE listing would enable institutional investors to establish positions in Fannie Mae and Freddie Mac.
- He noted that relisting would create favorable conditions for future secondary sales by the Treasury.
- He indicated that relisting would help President Trump meet his stated November 2025 timeline.
Related: Fannie Mae predicts major mortgage rate change
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