Monday, February 9, 2009

Missing the Bull's-Eye at Target

Given that I have commented on Bill Ackman and Pershing Square lately, I've included this letter to Pershing Square IV investors, who have now lost 90% of their invested capital.

As I wrote before, Pershing's TIP REIT transaction with Target was nothing more than a highly sophisticated attempt to immediately lift the stock price, and place Pershing's call options and total return swaps in the money.

But the main question that I have is, with stock prices where they are, would Bill Ackman now choose to buy Target stock, among all the other opportunities? In other words, is Target the most superior opportunity currently available?

To be clear, this is not an attack on Pershing Square or Bill Ackman, but a criticism of short-term-oriented investment strategies. With the benefit of hindsight, Ackman's leveraged Target investment appears to have been a mistake, made at the top of the market, caused by impatience.

Pershing Square IV Letter to Investors
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