Ackman and Burry are investing BFFs

Two of the brashest names in finance finally agree on something.

Hedge fund billionaire Bill Ackman dropped a new market call on his platform of choice yesterday. “Some of the highest quality businesses in the world are trading at extremely cheap prices,” he wrote on X. “Ignore the bears.”

If you’re wondering which companies Ackman is referring to, he gave us some ideas in his next post. The government-sponsored mortgage giants Fannie Mae and Freddie Mac are “stupidly cheap,” according to Ackman. He certainly has a point there: Fannie Mae and Freddie Mac are both down roughly 60% from their previous peak in September. Ackman predicted that the two companies could offer 10X returns, and that “it could happen soon.”

Since Ackman’s post, both companies have surged: Fannie Mae jumped 50.21% today, while Freddie Mac surged 50.23%.

To add fuel to the fire, Michael Burry, the famed investor who predicted the subprime mortgage crisis, backed Ackman up, responding to Ackman’s post on X, “Cannot emphasize enough how rare this is in this market.”

Quick rewind: Burry disclosed a significant stake in both Fannie and Freddie last December. He then noted in his popular Substack “Cassandra Unchained” that while both companies contributed to the 2008 financial crisis by owning subprime mortgages, some of the White House’s policies could actually be a boon to the two companies. But last week, Burry wasn’t quite as enthusiastic, predicting an IPO wouldn’t come until 2027 “at best,” and warning that housing “is in for a long winter.”

In previous social media posts, Ackman argued that the two companies had been treated unjustly by the US government after the housing bubble burst. Back in November, Ackman iterated a plan to re-list both companies on the New York Stock Exchange.

Back to value?

Ackman and Burry’s bullish take comes at a tumultuous time for the market: oil prices are sky-high due to the Iran war, inflation is beginning to make a comeback, and fears are swirling about the labor market slowing.

Those flashing warning signs are leading a lot of investors to flee stocks. But to Ackman, the fact that there’s anxiety means that many of the best companies are now trading at a bargain.

Another reason Ackman is so bullish is his insistence that the Iran war will soon end peacefully—an expectation that is by no means certain. “One of the most one-sided wars in history that will end well for the U.S. and the world,” he wrote in his original post.

Still, if these two are teaming up, perhaps it's worth paying attention.—LB