He's Got Prospects
It might be cool for activist investor Bill Ackman to hand out business cards that simply said: “William Ackman – Activist Investor.”
Seems the guy takes his role to heart.
One of the very few hedge funders who on occasion at least projects the appearance of humility – in February he famously issued an “I’m sorry” letter to participants in a Target-heavy fund that drastically underperformed – Ackman and his Pershing Square Capital are not shy about “what Target should do.”
The very next thing the $65 billion retailer should do, says Ackman, is elect him to its board of directors, along with four of his own candidates.
“William Ackman – Activist Director.”
The current Target board doesn’t like this idea. The issue will come to a head by Target’s May 28 annual meeting.
How will the Target-Ackman minuet play out over the long haul?
I think he saved Bullseye shareholders a bundle in 2008. It was at his urging that Target sold half its credit card receivables for $3.6 billion last May – before the financial crisis really got going. Target shares were trading around $54 then.
“William Ackman – Good Timing.”
But last fall, when Ackman pressed the company on his scheme for Target to spin off its real estate holdings and set up a leaseback-type structure that could unlock some the value and perhaps yield tax and cost benefits, he was rebuffed.
Rebuffed by Target – and then punished in the market as Target stock plunged into the $30-$35 range – an activist like Ackman is not one to sit still or walk away.
“William Ackman – Determined Suitor.”
He owns in the neighborhood of 3.4% of Target shares, and controls derivatives on another 4.4%. That’s more than enough for him to keep swinging away at chairman Gregg Steinhafel and the board – whether as a director himself or from the outside.
But “outside” is a relative term here. If romance won’t work, this suitor can tap other stratagems.
Ackman’s identity is at stake. I’m guessing that whatever happens on May 28, as long as the topic is Target, he’ll stay active.
