Carl Icahn buys $51 million in Fannie Mae, Freddie Mac shares


A woman toting an umbrella passes Fannie Mae headquarters in Washington, D.C., on Feb. 21, 2014. (Kevin Lamarque/Reuters)
June 3

Activist investor Carl Icahn acquired about $51 million in the common shares of mortgage financiers Fannie Mae and Freddie Mac from mutual fund manager Fairholme Funds in March, a court filing showed Tuesday.

Icahn, a billionaire investor known for taking big stakes in companies and pushing for management change, bought 6.8 million common shares of Fannie Mae and 5.7 million common shares of Freddie Mac from Fairholme, according to the filing with the U.S. Court of Federal Claims in Washington.

Icahn is the latest high-profile investor to bet on the companies, which are operating under conservatorship while Congress considers an overhaul of the mortgage finance system. The companies own or guarantee about 60 percent of all U.S. home loans.

Icahn was not immediately available for comment by phone.

The Pershing Square hedge fund, run by another activist investor, Bill Ackman, invested half a billion dollars to acquire stakes of nearly 10 percent each in Freddie and Fannie, regulatory filings showed in November. Ackman said at an investment conference last month that shares of Fannie Mae could be worth as much as $47 each.

The companies’ shares rose after reports of Icahn’s purchases. Fannie Mae traded up 4.7 percent at $4.65 per share, while Freddie Mac climbed 3.4 percent to $4.59 per share.

Regulators took control of District-based Fannie and McLean, Va.-based Freddie in 2008 after losses stemming from subprime mortgage investments pushed them to the brink of insolvency. The Senate is considering winding down the two taxpayer-owned companies, but the measure faces an uncertain future.

Fannie Mae and Freddie Mac posted profits of $5.3 billion and $4.0 billion, respectively, for the three months that ended March 31. Their newfound health has prompted some investors to snap up their stock in a bet that the companies will be made private.

As of March 31, Fairholme owned a 1.65 percent stake in Fannie and a 2.64 percent stake in Freddie, according to Thomson Reuters data. Last year, Fairholme sued the U.S. government, claiming that changes to the bailout terms for Fannie and Freddie unlawfully impaired shareholder value.

— Reuters

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