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Target Corp. (NYSE: TGT) is sitting pretty these days. While U.S. retail activity sank in June, Target joined Wal-Mart Stores, inc. (NYSE:WMT) in trumpeting same-store sales growth and again proving that it is competing for retail customers just fine. Not only is Target doing well, but it has caught the attention of activist investor William Ackman. Ackman's firm, Pershing Square Capital Management, has acquired 9.6% of Target Corp. common shares.

Last week's Target share price runup was due in part to the rumored Ackman deal as well as Target turning in excellent June metrics in a sea of disappointments from most of the retail industry in the U.S. Ackman's $1.98 billion purchase of over 81 million Target shares cements a pretty large position as his firm details out what improvements need to be made to increase Target's share price. Ackman obviously believes it is undervalued. How's Target in your portfolio? Retail is tricky, but a vote of confidence here by Ackman and Pershing looks pretty solid to me.

Although Target makes a pretty penny from its in-house credit card operations, there is a contingent of analysts who think Ackman will want Target to jettison that business completely. This makes some sense, as Target's exposure to receivables and undesirable credit lines would be eliminated. Target, for its part, wants to hold on to that part of the business. I'm surprised it just doesn't outsource it to some large bank and just brand the card with its logo. In other words, it must be making money for the company. If so, why would Ackman want to get rid of it? There will be more to come with this story as it develops.

Target receives boost from Pershing Capital originally appeared on BloggingStocks on Tue, 17 Jul 2007 11:19:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>Pershing Square Capital ManagementPershingSquareCapitalManagementTarget Corp.Target credit cardsTargetCorp.TGTWal MartWalMartWilliam AckmanWilliamAckmanWMTTue, 17 Jul 2007 11:19:00 EST