Pershing Square Capital now owns 9.6% of the shares of retailer Target (TGT). There had been news that the fund was holding about 5%.
Speculation is that Pershing would like to see Target sell its credit card operations, which have $6.5 billion in receivables, according to The Wall Street Journal.
Outside investors usually try to go after poorly run companies in the hope that they can get the firms to mend bad habits. But, Target falls into the category of public corporations that are considered well-run.
Over the last year, Target’s shares are up almost 50%. Rival Wal-Mart’s stock is up only about 15%.
Pershing calls Target "undervalued". Target says that its credit card business is essential to its relationship with customers.
On a stock price increase of 50%, a lot of shareholders are going to want to stick with management’s program.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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