Bill Ackman says some high-quality stocks are 'stupidly cheap' and the discount could offer 10x returns

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Bill Ackman says some high-quality stocks are 'stupidly cheap' and the discount could offer 10x returns.

stock :: 10hrs ago :: source - moneywise

By Monique Danao

As markets wobble near correction territory in 2026, billionaire investor Bill Ackman is leaning in — not pulling back.

The founder of Pershing Square Capital Management says many high-quality stocks are trading at steep discounts, calling this “one of the best times to buy quality” (1). His message to investors: ignore the noise and focus on long-term opportunity.

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Ackman has singled out two controversial names — Fannie Mae and Freddie Mac — as “stupidly cheap,” suggesting they could deliver returns of up to 10 times their current value (1).

Here’s what’s behind the bold claim reported in Business Insider and what everyday investors should consider before following his lead.

Why Ackman sees opportunity right now

Despite ongoing volatility, Ackman believes the market is mispricing strong businesses.

In a recent post on X, he argued that “some of the highest quality businesses in the world are trading at extremely cheap prices” (2). His claim can be attributed to macro fears, media narratives and geopolitical uncertainty as factors pushing valuations down.

When fear dominates market sentiment, even solid companies can become undervalued. The current situation can create asymmetric opportunities where potential upside far outweighs downside risk.

Many value investors look for moments when markets overreact, which drive prices below intrinsic value.

What’s notable is how confident Ackman is in the current setup. He’s not just suggesting selective buying — he’s framing this as a rare window of opportunity.

The case for Fannie Mae and Freddie Mac

Ackman’s most eye-catching picks are Fannie Mae and Freddie Mac, two government-backed mortgage giants.

Both stocks have dropped roughly 40% this year, but Ackman believes that decline has created a massive buying opportunity (1).

His argument largely hinges on how these companies have been treated since the mortgage crisis. After 2008, both firms were placed under government conservatorship (3), with profits largely directed to the U.S. Treasury.

Ackman has long argued that this arrangement unfairly suppresses shareholder value — and that policy changes could unlock significant upside.

If those changes materialize, the stocks could surge dramatically, potentially delivering 10x returns from current levels.

He’s not alone in this view.

Michael Burry — best known for predicting the 2008 housing crash — has also turned bullish on the two companies. In late 2025, Burry disclosed sizable positions in both Fannie and Freddie, noting that while they were once major contributors to the housing crisis, shifting political and regulatory conditions have changed the investment case (1).

“Cannot emphasize enough how rare this is in this market,” Burry wrote on X in response to Ackman’s comments (4).

Why this is a high-risk bet

While the upside sounds compelling, this is far from a typical stock pick.

Fannie Mae and Freddie Mac are deeply tied to government policy, making them highly unpredictable investments. Their future depends less on traditional business performance and more on regulatory decisions, legal outcomes and political priorities.

That creates a level of uncertainty most everyday investors aren’t used to.

Even Ackman’s thesis relies heavily on potential policy shifts — not guaranteed developments. If those changes don’t happen, the stocks could remain suppressed for years.

There’s also historical baggage to consider. Both companies were at the heart of the subprime mortgage crisis, and that legacy still shapes their structure today.

What everyday investors can take from this

Here are a few practical takeaways from Bill Ackman's strategy:

1. Volatility can create opportunity: Market uncertainties often push strong companies to discounted levels. Long-term investors can use these periods to buy quality assets at better prices.

2. Focus on fundamentals: A good tip is to make decisions based on long-term growth potential of stocks to help cut through the noise.

3. Be cautious with asymmetric bets: If you invest in high-upside opportunities, they should only make up a small portion of a diversified portfolio.

4. Diversification still matters: Even if one investment has huge potential, spreading your portfolio across different sectors and assets should be your core strategy.

The best opportunities often arise when markets are most uncertain.

But not all “cheap” stocks are created equal.

For most people, the smarter move may be to draw inspiration from Ackman’s broader strategy: buying quality during downturns rather than trying to replicate his highest-risk bets.

Because in investing, it’s not just about finding the biggest possible return.

It’s about finding the right balance between opportunity and risk.