The idea of spinning off the real estate assets worked great in a bubble real estate market but its a lousy idea in a declining asset market --- the opposite of buying assets when they are cheap. Another open question is whether Target's woes -- the company has lagged other discount retailers -- are self inflicted or secular. Arch-rival Wal-Mart has mainly seen sales growth in groceries, an area where Target lags far behind. Target has begun to turn its credit card portfolio around, according to company CEO Greg Steinhafel. Not that this makes Target a screaming buy. After all, Ackman has lost several billions (estimated) on Target through one of his hedge funds that only held Target shares and scarfed up options to maximize leverage -- options that have come back to bite Ackman as they have expired.
All of this said, Target's shares will likely rebound nicely with the economy. The merchandise remains high quality. Management is smart. The brand is relatively unsullied and upscale downscale will continue to appeal as American's spend less and save more. So Ackman might get some relief but it won't be by convincing Target management to sell off commercial real estate into the teeth of a rapidly declining market.
Alex Salkever is Director of Research at Piqqem.com, a stock analysis community leveraged to the Wisdom of Crowds.