Target
Looks like it is.
In an amended 13D filing, Bill Ackman’s hedge fund Pershing Square Capital Management is now showing a 4.4% ownership stake in Target (TGT). This is down from their previous 7.8% ownership stake in the company. Pershing Square reduced their overall position through a combination of transactions including the sale of options and purchase of common stock. Originally, Ackman’s 7.8% stake was comprised of 3.3% in common stock and 4.5% in stock-settled call options. Now, Ackman’s reduced 4.4% stake is comprised of 3.5% worth of stock and 0.9% worth of options. They are now showing an aggregate amount of shares beneficially owned of 32,994,586.
This was our favorite come from behind tale. If Ackman drops it much further it will be a sad day indeed at the Dealbreaker offices.
(We love you, Bill! Call us!)
Bill Ackman’s Pershing Square Reduces Target (TGT) Position [Market Folly]
As many of you are aware, Bill Ackman lost his Target battle last week, a fight he’s shed blood, sweat and tears over. Like, actual tears. As noted here on Thursday, the Pershing founder visibly choked up during his presentation. He didn’t have to explain the show of raw emotion to us, or most of his hedge fund friends (like the SAC sisters in Stamford, who burst into tears on the regular during business hours, knowing the value of a good cry) but apparently Times reporter Joe Nocera begged to differ. While JoNo is no stranger to the difficulty finance gurus can have in reigning in their feelings when things don’t necessarily go their way (he being a self-identified pal of Cliff Asness), the journalist was shocked (and sickened) by the display, writing Friday night:
I’ve seen my share of odd moments during annual meetings, but until Thursday I’d never seen a grown man cry during one.
O.K., maybe “cry” is a bit of an overstatement for what happened. Still, it was pretty startling when, in the middle of his speech to Target Corporation shareholders, William A. Ackman, the hedge fund manager who had waged an expensive, high-profile proxy fight against the company, suddenly choked up and stopped speaking. He wiped away a tear.
Nocera goes on to say why he’s puzzled by Ackman’s battle, and corporate governance in general, and then more on the salty discharge coming out of BA’s eyes, which you can read here. OR: you can read Ackman’s 5,000+ word response, which he stayed up ’til dawn writing (“I haven’t done an all-nighter since college,” he told Joe in an email). For those of you for whom 5,000 is a bit too much, we say: go fuck yourselves! Kidding. But seriously. As Billy-boy put it to Nocera, when asked for a shorter version, “I think every word is important.” So, so true. Nevertheless, here’s the extremely short explanation of the crying:
We aren’t totally sure that “soft sell” is how we would put it, but maybe softer sell. And this is definitely just because we can’t help but root for Ackman (90% losses are nothing compared to boyish charm, you know) and Target is such a tantalizing… er… target. Plus, anyone who doubles down with such ease cannot help but attract our (sideways, nervous) glance. So, if the Post wants to give us WA the soft-seller underdog, we’re game.
Portraying himself as “the underdog” in the fight, Ackman referred to Target’s board as a stagnating “friend of Bob,” with change-resistant members handpicked long ago by retired chairman Bob Ulrich.
As he introduced his own slate to Target investors at a Midtown auditorium yesterday, Ackman took pains to insist that his own nominees — with backgrounds in groceries, credit cards and corporate governance, in addition to real estate — weren’t merely stooges assembled to further his own agenda.
“I just want independent, fresh perspective on the board,” Ackman said.
(Michael Douglas actually thought Gekko was evil, and Carl may be the elder statesman of activists, but you are the young upstart for us every time! Call us WA! We still love you!)
Ackman’s Soft Sell [The New York Post]
Though likely reeling from the recent blows to his Target holdings, Bill Ackman isn’t going to go quietly into the night any time soon. The New York Times reports today that our activist hero (we love you BA!) is in talks with Target to add (and subtract) some board members.
We agree with the big BA that Target is badly undervalued, but only because we think people under-appreciate the value of ordering from a wide selection patio and garden furniture online (nothing like a little bit of South Bali collection to round out the condo on the 6th floor you might have to vacate any day now).
We are going to ignore the fact that you sold a bunch of Target calls this month. That’s just positioning. We know, we know.
Ackman Talks to Target About Board Seats [The New York Times]
Sad tidings from the hedge fund return unit at Dealbreaker (often first, but in this case shamelessly lifted from Bloomberg):
William Ackman’s hedge fund that invests solely in Target Corp. fell 40.1 percent in January, bringing the loss since inception to 89.5 percent, according to a letter sent to investors.
We love the WA. We are so sad. (Call us, Bill. Seriously).
Ackman’s Pershing Square Target Fund Falls 40.1% in January [Bloomberg]
1:28: Nothing happening yet. Jazz is playing
1:31: Ackman in the house. “I’m supposed to say we have a 75 cash settled call position on Target…inside joke.”
1:31: This is not “activist v company.” We’ve had a wonderful dialogue. This is a great management team.
Where do we stand now? In May we made a presentation. We’re trying to iterate a solution to a problem we’ve identified. The company has raised some concerns. We’ve made adjustments to the transaction
- Shout-out to advisors UBS and Sullivan & Cromwell
- Real estate side of Target = “superb assets.” 95% of the buildings are owned. Own 84% of distribution centers. Known for keeping stores and parking lots clean.
- Target owns highest percentage of its real estate compared to other big box retailers.
- What if Target were to rent its real estate?
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
