Remember about a year ago when Bill Ackman shed tears at Target’s annual shareholder meeting after losing one of the most expensive proxy fights in history against the big box retailer?
At the time, Pershing Square IV, the Target-focused fund Ackman collected $2 billion for, had lost almost 90 percent of its value. The losses prompted Ackman to “apologize profusely” to investors in the fund and declare the losses “one of the greatest disappointments of my career to date.” Pershing also restructured PSIV, cutting fees and letting some investors out early.
Fast forward a year and PSIV is now up 175 percent since the restructuring, according to an investor in the fund (although it’s still down since its inception in the summer of 2007.) Ackman has also scored big on the mall owner General Growth Properties, chalking up absurd returns of over 20 time his original investment despite criticism of his position from other hedge fund managers.
With Target’s annual shareholder meeting about a month away, we're wondering whether a newly-emboldened Ackman will revive his boardroom brawl. Pershing isn't saying either way but we know Target is gearing up for another fight just in case.
Pershing Square still owned 21 million shares or 2.8 percent of the company at the end of 2009, according to its latest SEC filing. In Ackman’s third-quarter investor letter, he pledged to hold the position in Target, which he still believed was undervalued. Still, at the time he issued the letter, Target shares were trading $10 less than where they are now.