Bill Ackman, who runs the $15 billion Pershing Square Capital Management LP, said that Fannie Mae (FMCC) and Freddie Mac will probably soar because there's no way to replace the mortgage guarantee companies.

Fannie Mae could be worth $23 to $47 a share over time, said Ackman, 47, speaking at the 19th annual Sohn Investment Conference in New York, where he referred to a 110-slide presentation on the mortgage companies. Fannie Mae reversed losses and rose 3 percent to $4.10 at 4 p.m. in New York trading. Freddie Mac shares rose 6.3 percent to $4.23.

Pershing Square has about 11 percent economic exposure to Fannie Mae and Freddie Mac shares based on common stock outstanding, a stake first disclosed last year. While lawmakers are weighing methods to wind down the companies, Ackman said mortgage rates would jump without the government-sponsored enterprises.

"There is no viable alternative," to Fannie Mae and Freddie Mac, Ackman said after the Sohn presentation. "Preserving the 30-year prepayable fixed-rate mortgage — it's like the bedrock of the housing system — is critical. We think the only way to do it is by preserving Fannie and Freddie."

The mortgage giants should "wind down the business of fixed income arbitrage" that got them into trouble during the financial crisis, "and focus on guaranteeing middle class mortgages for credit worthy borrowers," Ackman said.

Record Profits

The U.S. government owns warrants to buy 79.9 percent of the equity in Fannie Mae and Freddie Mac, which buy mortgages and package them into securities.

The two companies began posting record profits as the housing market rebounded. Shareholders including Bruce Berkowitz's Fairholme Capital Management and hedge fund Perry Capital LLC are calling for the U.S. to allow investors a share in the funds the companies are returning to taxpayers.

Fannie Mae reported an $84 billion profit for 2013, the highest-ever for the 80-year-old company, while Freddie Mac reported a record profit of $48.7 billion.

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