BOSTON, April 9 (Reuters) - Target Corp delivered big returns to hedge fund manager William Ackman and his investors in March when a fund of his that invests exclusively in the low-cost retailer rose 48 percent, a person who saw the numbers said.
This marks a dramatic rebound for the fund in question, Pershing Square IV, from a 40 percent slump in January and a 33 percent decline in February, when Ackman said the $2 billion fund was nearly wiped out. He allowed investors to leave and kicked in $25 million of his own money to keep the portfolio alive.
After delivering their worst-ever returns last year when the average fund lost 19 percent, these loosely regulated, private offerings have been doing better this year, gaining 1.8 percent in March and being up modestly for the quarter.
The share price has dropped ever since Ackman began buying Target -- known for its trendy but modestly priced fashions and home furnishings -- at roughly $60 in April 2007. Because PSIV owns a 2-to-1 leveraged interest in Target principally through stock options, the decline had an especially big impact.
In a letter to investors in February, the 42-year old hedge fund manager apologized 'profusely for the fund's results to date' and called this 'one of the greatest disappointments of my career to date.'
In the last weeks, however, Target's share price has performed better. Since Ackman announced plans in March to mount a proxy fight, the stock price has gained roughly 36 percent. It closed up 6 percent at $39.89 on Thursday.
For the manager, who has recently staked much of his reputation and some of his personal fortune on this one bet, the rising share price coincides with his bid to replace a handful of Target directors with his own candidates.
By May 28, Ackman hopes to convince investors ranging from State Street Global Advisors to Fidelity Investments to Capital Research Group to throw their weight behind him and his team of experts who he says will offer fresh perspectives on food retailing, credit cards and real estate.
Target is urging investors to ignore Ackman and his slate, warning a vote for the hedge fund's slate would could support what the company calls Ackman's 'risky agenda.'
(Reporting by Svea Herbst-Bayliss; Editing by Andre Grenon) Keywords: HEDGEFUND/ACKMAN (Svea.Herbst@Reuters.com +1 617 856 4331; Reuters Messaging: svea.herbst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
This marks a dramatic rebound for the fund in question, Pershing Square IV, from a 40 percent slump in January and a 33 percent decline in February, when Ackman said the $2 billion fund was nearly wiped out. He allowed investors to leave and kicked in $25 million of his own money to keep the portfolio alive.
After delivering their worst-ever returns last year when the average fund lost 19 percent, these loosely regulated, private offerings have been doing better this year, gaining 1.8 percent in March and being up modestly for the quarter.
The share price has dropped ever since Ackman began buying Target -- known for its trendy but modestly priced fashions and home furnishings -- at roughly $60 in April 2007. Because PSIV owns a 2-to-1 leveraged interest in Target principally through stock options, the decline had an especially big impact.
In a letter to investors in February, the 42-year old hedge fund manager apologized 'profusely for the fund's results to date' and called this 'one of the greatest disappointments of my career to date.'
In the last weeks, however, Target's share price has performed better. Since Ackman announced plans in March to mount a proxy fight, the stock price has gained roughly 36 percent. It closed up 6 percent at $39.89 on Thursday.
For the manager, who has recently staked much of his reputation and some of his personal fortune on this one bet, the rising share price coincides with his bid to replace a handful of Target directors with his own candidates.
By May 28, Ackman hopes to convince investors ranging from State Street Global Advisors to Fidelity Investments to Capital Research Group to throw their weight behind him and his team of experts who he says will offer fresh perspectives on food retailing, credit cards and real estate.
Target is urging investors to ignore Ackman and his slate, warning a vote for the hedge fund's slate would could support what the company calls Ackman's 'risky agenda.'
(Reporting by Svea Herbst-Bayliss; Editing by Andre Grenon) Keywords: HEDGEFUND/ACKMAN (Svea.Herbst@Reuters.com +1 617 856 4331; Reuters Messaging: svea.herbst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.