Hedgies invested in Fannie Mae and Freddie Mac unwrapped an early $12 billion Christmas present from President-elect Donald Trump on Wednesday.
That’s how much value was added to the mortgage giants’ shares after Trump’s Treasury secretary designee, Steven Mnuchin, said one of his priorities was to “get Fannie and Freddie out of government ownership.”
“It makes no sense that these are owned by the government and have been controlled by the government for as long as they have,” the 53-year-old former Goldman Sachs partner told Fox Business Network.
Investors took Mnuchin’s comments to mean the Treasury Department would stop collecting the profits of the two companies — as it has since taxpayers came through with a $187.5 billion bailout in 2008.
Hedge fund moguls have been pressing that point for years.
On Wednesday, shares of the two companies soared 45 percent.
And the timing couldn’t have been better — coming on the last day of the month when hedge funds, many of which have been struggling, close out their books.
For the month, each company is up nearly 230 percent.
In 2012 — as Fannie and Freddie were returning to profitability — the bailout terms were modified, redirecting profits to the Treasury Department, not to shareholders.
Hedge funds that invested in the two — Pershing Square, Paulson & Co. and soon-to-be- closed Perry Capital — have been fighting the government’s decision through a mix of lawsuits and lobbying efforts.
Perry Capital has claimed the profit sweep is “unconstitutional.”
Representatives from Perry Capital did not respond to requests for comment.
Pershing’s Bill Ackman has long argued that Fannie and Freddie allowed for the creation of the 30-year mortgage — and in 2015 called the long-term mortgage a “uniquely American financial product.”
“Fannie and Freddie should be limited to the core business they were set up to do, which is to guarantee first mortgages on middle class housing for creditworthy borrowers, and that’s a safe business,” Ackman said in early November. “It’s a utility-like business.”
“I couldn’t imagine a better person to negotiate with than someone who knows something about real estate,” Ackman said of Trump.
Pershing Square declined to comment further.
Still, despite recent investor exuberance, ending the government conservatorship will not be easy even though people “assume the seas are going to part” for Trump, Christopher Whalen, senior managing director of KBRA, told The Post.
“You can’t end the support of the federal government — you would still have to have some kind of backstop. Otherwise, you wouldn’t have investors. That’s the bottom line,” Whalen said.