Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Ackman: Fannie 'best trade...in capital markets'

Share
Bill Ackman
Kerima Greene | CNBC

Hedge fund mogul Bill Ackman has extremely high conviction on what was a losing trade for him last year: the stock of housing giants Fannie Mae and Freddie Mac.

"It's the most interesting risk-reward that I'm aware of in the capital markets right now," Ackman said Thursday at the Harbor Investment Conference in New York, a charity event he organized.

Ackman positions in both stocks were some of the few losers in his portfolio last year.

Read More What's up with Miami's condo conundrum?

Fannie Mae and Freddie Mac share prices declined 32 percent and 29 percent, respectively, in 2014.

Ackman recommended owning common stock over preferred shares.

He said Congress would eventually stop taking all profits from Fannie and Freddie and let them recapitalize through private markets.

Read More Summers: Why the Fed should not raise rates

He also warned that the current status of the GSEs, or government sponsored entities, was dangerous; a "slight downturn" in the markets could cause another taxpayer-led bailout.

He said it was politically unrealistic to eliminate the 30-year mortgage, long a tradition in the U.S. and the core of the GSE business.


More In Net Net: Promoting innovation and managing change

watch now
VIDEO06:34
CNBC ProFive9 CEO on cloud transition, automating call centers and Covid clinics
watch now
VIDEO07:26
CNBC ProConstellation Brands CEO on taking stake in Black-owned La Fête du Rosé