Ahmed Ali

[Bill Ackman @BillAckman]

I am often asked for stock recommendations, but generally don’t share individual names unless I believe the risk versus the reward is extraordinarily compelling.

As we look toward 2025, one investment in our portfolio stands out for large asymmetric upside versus downside so I thought I would share it.

We have owned Fannie Mae and Freddie Mac common stock for more than a decade. Today, they trade at or around our average cost. As such, they have not been great investments to date.

What makes them particularly interesting today versus any other time in history is that there is a credible path for their removal from conservatorship in the relative short term, that is, in the next two years.

During Trump’s first term, Secretary Mnuchin took steps toward this outcome, but he ran out of time. I expect that in the second @realDonaldTrump administration, Trump and his team will get the job done.

A successful emergence of Fannie and Freddie from conservatorship should generate more than $300 billion of additional profits to the Federal government (this is on top of the $301 billion of cash distributions already paid to the Treasury) while removing ~$8 trillion of liabilities from our government’s balance sheet.

The GSEs have built $168 billion of capital since Mnuchin ended the net worth sweeps in 2019. This is already a fortress-level of capital for guarantors of fixed-rate, first mortgages to creditworthy, middle class borrowers.

The scenario we envision is that:

(1) the GSEs are credited with the dividends and other distributions paid on the government senior preferred, which would have the effect of fully retiring the senior preferreds at their stated 10% coupon rate with an extra $25 billion profit (in excess of the preferreds’ stated yield) to the government. This extra profit could be justified as payment to the government for its standby commitment to the GSEs during conservatorship.

(2) the GSEs’ capital ratio is set at 2.5% of guarantees outstanding, a level which would have enabled the GSEs to cover nearly seven times the their actual realized losses incurred during the Great Financial Crisis — a true fortress-level balance sheet.

A 2.5% capital ratio is the same required for mortgage insurers who by comparison guarantee the first ~20% of losses on often riskier mortgages with less creditworthy borrowers, compared with the GSEs’ guarantee which attaches at the senior-most <=80% of the property’s mortgaged value. Mortgage insurers therefore typically incur 100% losses on a default whereas by comparison GSE losses on a default are minimal.

The GSEs also have enormous ongoing earnings power, particularly during challenging periods in the housing market where they tend to take significant additional market share. This enables them to quickly recapitalize after a period of housing market stress.

Assuming a Q4 2026 IPO, the two companies collectively would need only raise about $30 billion to meet the 2.5% capital standard, a highly achievable outcome. Freddie needs more than Fannie (which will need little if any capital) because it has grown its guarantee book more quickly than Fannie in recent years.

We estimate the value of each company at the time of their IPOs in 2026 at ~$34 per share. We assume their IPOs are priced at $31 per share reflecting a ~10% discount to their intrinsic values.

We calculate a profit to the gov’t of ~$300 billion assuming full exercise of its warrants and a sell down of common stock in both companies over the five years following the IPOs.

We believe the junior preferreds are also a good investment, but they do not offer nearly the same return because their upside is capped.

Trump likes big deals and this would be the biggest deal in history. I am confident he will get it done.

There remains a high degree of uncertainty about the ultimate outcome so you should limit your exposure to what you can afford to lose if you choose to invest.

Happy New Year!

[Ahmed Ali @adali288]

@BillAckman, i have a presentation on 6 January of your crusade against herbalife. Wish me luck!

[Ahmed Ali @adali288]

Embassy of the Kingdom of Saudi Arabia in Federal Republic of Germany https://t.co/ZPbs8Ubybw

[Ahmed Ali @adali288]

@UN @AgnesCallamard @UNESCO Please watch this movie, THE GOAT LIFE it's an Indian movie based on the true story. It's a story about how HUMANs were treated and traded.

[Ahmed Ali @adali288]

@AgnesCallamard Tous nos espoirs reposent sur vous./ Alle unsere Hoffnungen ruhen auf Ihnen.

[Ahmed Ali @adali288]

@PakinSaudiArab
Ap sy 2 sawal hai. 1) agr mai 14 days dubai mai guzara tooh kia mujy saudia mai 5 days quarantine krna parey ga?
2. Aur agr mai ny 11 days dubai mai guzarey tooh kia mujy 5 days saudia mai quarantine krna ho ga?

[Ahmed Ali @adali288]

@bilalakbar73 @AnasRasheed85 @Saudi_Gazette lieutenant general bilal akbar! I hope you do realise now how a comman Paki is being treated in these arabs countries. Q k Ap ko bhi tooh kafi mintey talrey krni par rahi hai. Kash ap logo ny Pak ko theek sy manage kiyh hota tooh aisa na hota. Ab pata chala k kitney xenophobic ha

[Ahmed Ali @adali288]

@bilalakbar73 @AnasRasheed85 @Saudi_Gazette lieutenant general bilal akbar! Because of your absurd tweet we are losing our time and money. We don't know should we wait and waste our time and income. Who will be responsible if we go through another country and then the flights are open? I will be u bcz you're not answering.

[Ahmed Ali @adali288]

@bilalakbar73 @AnasRasheed85 @Saudi_Gazette It's November now and there is no news for the flights. What on earth is going on? Why the people of Pakistan are being treated as sub humans. I hope you do realise now what is your worth.

[Ahmed Ali @adali288]

@ukblm @BLMLA @blacklive

[Ahmed Ali @adali288]

In tiblisi Airport, Georgia. A Nigerian passenger was assaulted and was treated like a sub-human because of his color and race. I have the video evidence of whole scenario. It was a blatant violation of human rights. The whole incident happened on 12th August 2021 mid night.@hrw

[Ahmed Ali @adali288]

2. i even heard an immigration officer calling someone named usama and refereeing him as usama bin laden.@UNHumanRights @HumaneSociety @HRC