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Pershing Square takes nearly 10% in both Fannie Mae, Freddie Mac.


18 November 2013 a[euro]" US hedge fund Pershing Square Capital Management LP unveiled it had bought nearly 10% stakes in both the Federal National Mortgage Association (OTCBB:FNMA), also known as Fannie Mae, and the Federal Home Loan Mortgage Corp (OTCBB:FMCC), or Freddie Mac.

The fund, owned by activist investor William Ackman, said in two separate regulatory filings it held 9.77% in Freddie Mac and 9.98% in Fannie Mae.

The announcement comes after US investment manager Fairholme Capital Management LLC said it had offered to acquire the mortgage-backed securities insurance operations of both government-controlled entities. Fairholme has made the proposal to the relevant federal government officials, with plans to bring in about USD52bn (EUR38.5bn) of private capital.

The scheme involves the formation of two new state-regulated private insurance firms that will buy, recapitalise and operate the insurance businesses of Fannie Mae and Freddie Mac. These companies would be capitalised with some USD34.6bn in exchange for preferred stock plus at least USD17.3bn of new capital raised from preferred stockholders in a rights offering. The move will enable the liquidation of Fannie Mae and Freddie Mac and put an end to the entitiesa[euro](tm) federal charters and special statuses.

In Pershing Squarea[euro](tm)s filings, the fund noted it considers Freddie Mac and Fannie Maea[euro](tm)s shares to be a[euro]oeundervalueda[euro], while also being an a[euro]oeattractive investmenta[euro]. It went on to say it may engage in discussions with the board, other stockholders, federal government representatives and other relevant parties with regard to Fairholmea[euro](tm)s proposal.Country: USASector: InsuranceTarget: Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac)Buyer: Pershing Square Capital Management LPType: LBO, StakebuildingStatus: Closed

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Publication:M & A Navigator
Date:Nov 18, 2013
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