Billionaire investor Bill Ackman, who runs Pershing Square Capital Management, has a message for the Trump administration: slow down. The activist investor is cautioning against rushing initial public offerings for mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), arguing that a hasty IPO would leave serious money on the table.

A Better Path Forward

During an appearance on Fox Business' "Mornings with Maria," Ackman laid out a three-step reform plan that he believes could unlock "hundreds of billions of dollars in value" for taxpayers. His opening salvo was direct: "Rushing to IPO is a mistake," adding bluntly, "We think they are worth a lot more."

Here's how his strategy works: First, the Treasury would acknowledge payments already made by the companies. Then, Treasury would exercise its warrants to take a 79.9% common stock ownership stake. Finally, both entities would be relisted on the New York Stock Exchange. Done right, Ackman argues, this approach would let the market properly value these companies, potentially hitting a "400-billion-dollar market cap."

Why the Caution?

Ackman emphasized that these companies need serious groundwork before going public. He didn't mince words about the Obama administration's "net worth sweep," calling it outright "theft." He credited Secretary Steven Mnuchin with stopping that practice, which allowed Fannie and Freddie to rebuild their capital reserves.

Still, there's work to do. Ackman stressed that "a lot of steps needed to be taken" before any IPO, including resetting appropriate capital levels and assembling the "right teams in place." His concern isn't just about maximizing value—it's about not breaking something important in the process. The mortgage market is "fragile," he warned, and a botched transaction could cause real damage.

Threading the Needle

Ackman's plan attempts to solve a tricky problem: how do you get these companies properly valued without spooking the mortgage market? A rushed, uncertain IPO could widen mortgage spreads, making home loans more expensive for Americans. His solution? Keep Fannie and Freddie in conservatorship while listing them on the NYSE.

This hybrid approach offers what Ackman calls "the best of both worlds"—zero risk of spreads widening, with potential for them to actually narrow. It's a measured strategy designed to align with President Trump's goal of demonstrating value creation for taxpayers, while projecting valuations far beyond what previous estimates suggested.

The Bigger Picture

Ackman also weighed in on broader economic themes during his appearance. He's bullish on the U.S. economy, pointing to "massive AI investment," deregulation efforts, and tax reforms as powerful tailwinds.

On social policy, he made an impassioned case for expanding capitalism's reach through initiatives like universal 401(k) plans. His argument? Allowing all Americans to participate in capital markets could combat wealth disparity and the resentment that "leads to socialism."

Market futures were pointing higher Thursday, continuing momentum from Wednesday's gains across the S&P 500, Nasdaq 100, and Dow Jones indices.