Target's (TGT) Strength Makes Dissident's Assault A Likely Failure

Investor Bill Ackerman, who has held an investment in Target (TGT) for almost two years and has lost a great deal of money in the process, wants to replace part of the retailer’s board. Ackerman has been trying to get Target to separate some of its credit holdings into a new company to “unlock” the value of the financial arm of the firm. The recession and rising consumer defaults have made that plan look less attractive.

According to The Wall Street Journal, “Mr. Ackman says his candidates will bring new ideas to the discount retailer and relevant expertise to a board he describes as slow to make critical decisions.”

Ackerman will have real trouble advancing his agenda. So far this year, Target’s shares are up almost 30%. Wal-Mart (WMT) and Costco (COST) are each down 10%. Both JPMorgan and Credit Suisse recently upgraded their ratings on the retailer. Target also said its results for its latest quarter will be above expectations.

Ackerman may have had a chance to get investors to revolt against the Target board a year ago. Since then, he has lost whatever opportunity he had.

Douglas A. McIntyre