Wachovia shares are down Monday on "crisis psychology" -- but hedge fund master Bill Ackman is optimistic.
Ackman, managing principal of Pershing Square, scooped up a 7 percent stake in Wachovia, or "about 170 million shares," amid the news that Citigroup would buy the troubled financial's banking business.
"We started buying aggressively after the Citi deal was announced," Ackman told CNBC. "What was interesting was citi was buying a subsidiary, but assuming holding company liabilities -- an unusual transaction.
With rules now in effect that boost acquirors' ability to offset losses from bad debts held by other banks, and as a result of the "unusual" structure of the deal, some "very interesting tax attributes" were created -- namely, tax losses that can be carried back or forward.
"We had to sleuth around to figure out what's going on," he said.
And here's what's going on: "Our estimate of [Wachovia] value, on the low side, is $8 per share. Depending on how much cash is in the holding company, that could be a much higher number."
Ackman addressed the intrusion of Wells Fargo, which made its own higher offer for Wachovia -- an offer that was accepted. The counteroffer was a positive development, says Ackman: "It gave us some certainty" on valuation.
- Who Owns Citigroup?
- Who Owns Wells Fargo?
A bidding war would be "positive for the market," engendering "hope for banking in America."
And if Wells wins, "We could wind up as shareholders of...a very well-run franchise," said Ackman.
More optimism for financial stocks: Ackman notes that Pershing Square has also invested in AIG over the last two weeks.
Disclosure information was not available for Ackman or his fund.