This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bill Ackman to Sue U.S. Over Fannie, Freddie Mortgage Profits

Stock quotes in this article: FNMA, FMCC

NEW YORK (TheStreet) -- Fannie Mae  (FNMA) and Freddie Mac  (FMCC) common shareholders led by investor Bill Ackman’s Pershing Square Capital Management plan to file on Friday the latest of many shareholder lawsuits against the federal government tied to the profits of the Government Sponsored Enterprises (GSEs), according to a person with knowledge of the suit.

The suit joins others in contending the government wrongfully diverted profits from the GSEs to the Treasury, trampling the rights of shareholders.

In addition to the giant hedge fund, which is by far the largest non-government owner of common shares of GSEs Fannie Mae and Freddie Mac, numerous individual investors will join the lawsuit. Among these is a 90-year-old widow with 36,000 shares she has owned for more than 20 years.

Read More: Fannie and Freddie Investor Blackstone Also Sought Advisory Role

A spokesman for Pershing Square at Rubenstein Communications, who requested that he not be named in the story, declined comment.

Pershing Square owns about 63.58 million common shares of Freddie Mac worth $246 million, about four times as many as the next-largest shareholder, Bruce Berkowitz’s Fairholme Capital Management, according to the latest filings compiled by Bloomberg.  Pershing owns some 115.57 million shares of Fannie Mae worth about $448 million, more than 10 times Fairholme’s stake, which again is the next largest. Like many other large investors in Fannie and Freddie, including Perry Capital and The Blackstone Group  (BX), Fairholme has a large stake in Fannie and Freddie junior preferred shares. Fairholme has its own lawsuits pending.

In addition to its $189.4 billion senior preferred stake, the U.S. Treasury has warrants to own 79.9% of both Fannie and Freddie common shares. It has not yet exercised the warrants, however.

Treasury spokesman Adam Hodge had no immediate comment.

Read More: Obama AIG Fix-It Man Bets on Fannie and Freddie Turnaround

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs