Money winners of 2008: Bill Ackman knew Fannie and Freddie were in trouble

Filed under: Citigroup Inc. (C), Federal Natl Mtge (FNM), Amer Intl Group (AIG), Wachovia Corp (WB), Wells Fargo (WFC), Recession

This post is part of our feature on Money Winners of 2008. See all 20.

Bill Ackman, who manages the hedge fund Pershing Capital, was one of the first major investors to realize what poor shape Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) were in. He warned that the apparent back-up of the federal government wasn't going to do investors much good unless the company fell apart and had to be bailed out.

"It doesn't matter what the rating agencies say about their capitalization," Ackman told CNBC. "Implicit guarantees don't work in the market that we're in now." And he turned out to be right, of course. Ackman was shorting the debt of Fannie and Freddie.

While Ackman has had to take some heat from investors who blame him for profiting off Fannie and Freddie's collapse, some critics say he was a bloodsucker, others point to his keen analysis as the reason we should allow short selling: it's the only way to offer an incentive to investors not to believe the hype.

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Money winners of 2008: Bill Ackman knew Fannie and Freddie were in trouble originally appeared on BloggingStocks on Mon, 15 Dec 2008 18:40:00 EST. Please see our terms for use of feeds.

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