Hedge fund Pershing Square invested USD500 million to acquire almost 10% stakes each in mortgage insurers Freddie Mac and Fannie Mae. Pershing, which is owned by activist investor Bill Ackman, is the most recent investor this week to acquire stakes in the two companies. This was according to a report published by Reuters.

Pershing has over USD11.45 billion worth of assets in management. Ackman considers the shares of Freddi Mac and Fannie Mae "undervalued" and an "attractive investment," said the report.

Freddie Mac's shares went up 6.21% to USD3.08 per share. Fannie Mae's shares went up USD7.84% to USD3.30 on Friday, the report said.

The Federal Housing Finance Agency oversees the two mortgage finance companies. Therefore, recapitalization efforts for Fannie Mae and Freddie Mac are subject to congressional approval, Reuters said.

Fannie Mae and Freddie Mac were seized by the US government in 2008 during the crisis in the housing industry. Since then, the companies have been conducting operations under government conservatorship, the report stated.