Bruce Berkowitz, the money manager battling the U.S. government over the future of Fannie Mae and Freddie Mac, is calling on the boards of the mortgage-finance giants to build capital instead of turning over their profits to the Treasury now that they’ve returned to profitability.
Fairholme Funds Inc. can pursue government records in its lawsuit seeking compensation for the value of stock lost after the U.S. took over Fannie Mae and Freddie Mac in 2008, a federal judge in Washington ruled.
Bill Ackman, the activist hedge-fund manager, said he sold his firm’s General Growth Properties Inc. shares because the expected returns on the investment after management fees wouldn’t be high enough for his investors.
Fairholme Capital Management LLC, the mutual-fund firm run by Bruce Berkowitz, proposed buying two businesses that insure mortgage-backed securities from Fannie Mae and Freddie Mac to salvage a bet on the two government- backed companies.
Bruce Berkowitz waited until financial-services stocks had more than doubled from their March 2009 lows before buying stakes now valued at more than $3 billion. The manager of the $16.5 billion Fairholme Fund said his bet wasn’t placed too late.
Bill Ackman’s hedge fund-firm took stakes in Fannie Mae and Freddie Mac, the government-owned mortgage insurers that investor Bruce Berkowitz is seeking to restructure, and said it may seek talks with management, shareholders and the government.