WASHINGTON, DC—Bill Ackman has increased Pershing Square's stake in Fannie Mae and Freddie Mac from a combined 9.8% to more than 11% in each business, according to a regulatory filing and a report on Monday morning on CNBC's “Squawk on the Street.” The investment indicates that private equity is still highly interested in the GSEs in general, and, specifically, may be betting that a pending case against the US Treasury for appropriating the GSEs' profits will go in their favor. It also suggests that Ackman believes the GSEs will remain in the current form, more or less, despite a proposal in Congress to privatize the operations.

Last year Pershing Square announced it had acquired a stake in both entities, following by a day a proposal from another hedge fund, Fairholme Capital Management, to purchase Fannie Mae and Freddie Mac on behalf of private investors. Fairholme and other hedge fund titans, as it turned out, had acquired a significant position in the mortgage companies after the financial crisis, purchasing the preferred stocks for one-fifth of liquidation values. They filed suit against the US Treasury when the GSEs stopped paying dividends to their preferred shareholders a few years ago, keeping the GSEs entire proceeds instead. Fairholme's offer to buy Fannie Mae and Freddie Mac for $52 billion was in response to this brewing situation. The offer, though, was turned down and the suits are proceeding.

Depending on the timing of these various moving parts, the suits could hamper Congress' efforts to privatize Fannie and Freddie, Walker & Dunlop Willy Walker speculated in an internal memo when the legislation was unveiled. “If the courts determine that there was an unjust taking by the US Treasury, Congress will have a very difficult decision to make-write checks for billions of dollars to a number of high profile hedge funds, or spin Fannie and Freddie back out as private enterprises, allowing the hedge funds to maintain their ownership going forward.”