market folly

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.

Ackman recently discussed his position in TGT (among others) in Pershing Square's investor letter. In the letter, Ackman "continues to believe that Target offers attractive potential reward for the risk of ownership at current prices." The problem is, his actions conflict with his words here. But to be fair, he could just be bringing the position back down to preferred allocation levels, as shares of TGT have rallied 22% thus far in 2009. While we would love to give him the benefit of the doubt here, we prefer to follow and trust actions, not words. Additionally, we've also covered some of Ackman's past commentary on his Target position as well. Pershing runs a concentrated portfolio and Target has been their largest holding for some time now. However, with Ackman's reduction here, the gap may have narrowed between other top holdings.

One of Pershing's other most publicized positions has been General Growth Properties. Back in June we covered their presentation on General Growth Properties (GGWPQ) from the Ira Sohn Conference. That investment conference featured numerous prominent hedge fund managers who each presented investment ideas where GGWPQ was Ackman's pick.

For more background and information, be sure to check out our biography/profile on Bill Ackman & Pershing Square.

Taken from Google Finance, Target "operates Target general merchandise stores with an assortment of general merchandise and food items, as well as SuperTarget stores with a line of food and general merchandise items. Target.com offers an assortment of general merchandise, including many items found in the Company’s stores and a complementary assortment, such as extended sizes and colors, sold only online. The Company operates in two segments: Retail and Credit Card."