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StarTribune.com – Score a big one for Target Corp. provocateur William Ackman.
The activist shareholder got a boost from the business world’s most influential proxy advisory firm on Tuesday, when RiskMetrics Group said that investors should vote for Ackman and one of his dissident nominees on an expanded Target board of directors.
Meanwhile, another proxy-research firm, Glass Lewis, endorsed the Minneapolis-based retailers’ full slate of incumbents.
Reuters – The battle for board seats at Target Corp heated up on Tuesday when Pershing Square Capital Management called the current directors "suboptimal" after the retailer said the hedge fund has a "risky agenda.
The New York-based hedge fund, which owns about 7.8 percent of Target’s shares, and the Minneapolis-based retailer fired off a string of regulatory filings on Tuesday as the battle for votes intensified before the May 28 annual meeting.
New York (HedgeCo.Net) – Target Corp. asked shareholders yesterday to reject a proposed slate of directors nominated by Pershing Square Capital head William Ackman. Ackman’s hedge fund, who holds a 7.8 percent stake in the discount retailer, is continuing his proxy fight in an effort to boost stock prices and investor returns.
Ackman has suggested selling the land underneath Target locations, prompting the company to warn shareholders against his “risky agenda.”
“Ownership of the land under our stores and distribution centers allows Target to benefit from the value that we create on those sites, and provides necessary flexibility to make significant improvements to our stores to drive our strategy and protect our brand,” Target said in its regulatory filing yesterday.
Hedge fund Pershing Square IV, which is invested solely in Target, rose almost 50% last month after posting record losses last year. Earlier this year, Ackman told investors they could withdraw as much of their capital as they wanted, after the fund plummeted 90 percent. He threw in $25 million of his own money to help pay clients back.
On Monday, Pershing Square proposed a slate of five candidates to the board, all of whom claim to have the retail experience necessary for the company to succeed. Meanwhile, Target is hoping the shareholders will ignore the hedge fund’s advances and instead elect their proposed slate of four.
Ackman’s candidates for the board include himself, Richard Vague, a former bank executive, former Starbucks CEO Jim Donald, Ronald Gilson, a law professor, and Michael Ashner, CEO of Winthrop Realty Trust.
“We believe Pershing Square’s sizable derivative positions create an incentive to favor risk-taking to affect short-term share price performance, even if it harms Target in the long run,” Target added.
Target shares jumped 5.27 percent today in morning trading to $39.58. Shares are still recovering from their tumble in 2008, when they reached almost $60 in September.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Pershing Square Capital head William Ackman is planning to nominate himself, along with four others to the Target Corp. board of directors, in which the hedge fund holds a near 10 percent stake.
Ackman has confirmed that he is nominating former Starbucks CEO Jim Donald, Winthrop Realty Trust CEO Michael Ashner, former bank exec Richard Vague and Ronald Gilson, a professor of law at both Stanford and Columbia, to the discount retailer’s board.
Ackman has been vocal about his intent to spruce up Target’s management in an effort to boost share prices and returns for his investors, while giving the company a better chance at competing with fellow discount chain Wal-Mart.
While Target has experienced lagging stock prices and lower-than-expected sales this past year, they are “disappointed that Pershing Square has decided to pursue a costly and disruptive proxy contest, especially in light of our previous dialogue,” according to a statement. They also said they have been responsive to shareholders while partaking in discussions with the hedge fund over the last 20 months.
Ackman has already allowed investors in his Pershing Square IV Fund to withdraw their capital when the fund, which was invested solely in Target, turned out to be “one of the greatest disappointments of [his] career,” after plunging over 90 percent this year.
Ackman stated that despite the performance, he still has confidence in Target and believes that the new slate of directors will bring an experience to the board that the company is currently lacking.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
Bloomberg – William Ackman’s hedge fund that invests solely in Target Corp. fell 33.3 percent in February, bringing the loss since inception to 93 percent, according to an e-mail sent to investors.
The decline in Pershing Square IV fund was more than three times that of Target shares in February. Ackman made his bet using options rather than the underlying stock, which can magnify gains or losses on an investment. Target tumbled about 9 percent last month.
Ackman last month told investors seeking redemptions that they would get their money back in March.
Associated Press – Activist hedge fund manager William Ackman is in talks with Target Corp. about naming potential directors to the discount retailer’s board, according to a Securities and Exchange Commission filing on Thursday.
Target shares gained 61 cents, or 2.2 percent, to $28.43 in aftermarket electronic trading, after gaining 23 cents to close the regular session at $27.82. The stock has lost about half of its value since peaking at $59.55 in September before the market meltdown.
In recent months, Target Corp. has suffered from a drop in consumer spending, while other discount chains — particularly rival Wal-Mart Stores Inc. — have outperformed. While Wal-Mart concentrates on offering low-price essentials, Target has focused more on a cheap-chic variety of more discretionary items like clothing and home decor.
On Tuesday, Target reported that its fourth-quarter profit fell 41 percent.
Birmingham Business Journal – The hedge fund created by activist investor William Ackman to buy up shares of Target Corp. lost 40.1 percent of its value in January, according to a Bloomberg News report.
Since creating the fund, called Pershing Square IV, Ackman has acquired a 9.7 percent stake in Target. He recently attempted to convince Target to spin off its real estate holdings into an investment trust. However, company officials decided not to pursue the strategy. Ackman also urged Minneapolis-based Target to sell off its credit-card receivables. It completed the sale of half of its receivables last year.
Bloomberg – William Ackman’s hedge fund that invests in Target Corp. fell 68 percent last year, more than double the loss by the second-largest U.S. discount chain.
Pershing Square IV declined 7.7 percent in December alone, according to a letter to investors from Pershing Square Capital Management LP. Ackman and Pershing spent about $2 billion in 2007 for a stake in Minneapolis-based Target. Ackman has since pressed Target to buy back shares, sell its credit-card unit and extract more value from its real estate.
Ackman, who controls 9.5 percent of Target, proposed last year that the company place the land under Target stores into a real estate investment trust that would lease the property back to the retailer. The New York-based investor has argued that such a move would free up cash for the company and result in a higher valuation.
Pershing Square IV’s loss last year followed a decline of 43 percent in 2007. The fund is structured so its returns to investors double the stock’s movement.
Bloomberg – Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.
Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.
The worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won’t deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.
New York (HedgeCo.Net) – RAB Special Situations hedge fund is contemplating a share buyback, after getting burned by the nationalization of Northern Rock and the plummeting of share values that followed. The fund said it may repurchase the shares and either hold or cancel them.
"Our strategy has now lost money for three straight quarters ever since the credit crunch spread from the debt markets and began to hurt equity valuations," said RAB head Philip Richards.
While he did write off the Northern Rock loss as “very regrettable,” Richards went on to explain how he believes in a twenty year super-cycle for commodities. This would be driven by urbanization and industrialization in China, India and the Gulf region; areas that he says are experiencing supply shortages stemming from decades of under-investments in the mining and energy industries.
The $1.5 billion fund lost about 37% of its NAV this year. While it was the biggest holder of Northern Rock, other sour investments would have still forced the decline in Net Asset Value. The fund posted a loss of 28.9 million pounds, or 53.8 million dollars in the first six months of this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
