Pershing Square Boosts Target Stake, Despite Losses

Feb 18 2009 | 1:08am ET

Though it has caused him nothing but trouble in recent years, William Ackman isn’t giving up on Target Corp. In fact, the activist hedge fund manager is upping his bet on the retailer.

Pershing Square Capital Management said yesterday that its Pershing Square Capital fund has boosted its stake in Minneapolis-based Target by 36.7%, adding 7.2 million shares since the end of last year, according to a regulatory filing. Last week, Pershing Square said it owned a 9.7% stake in Target across all of its funds—including one that invests exclusively in Target securities, which has lost almost 90% of its value since it launched in 2007. The firm controlled a 9.5% stake in Target in mid-August.

The New York-based hedge fund said Pershing Square Capital managed $2.43 billion as of Dec. 31, down from $3.88 billion.

The filing shows that Pershing Square Capital also boosted its investments in Visa Inc. and bought more than 20 million shares of General Growth Properties, the second-largest shopping mall owner in the U.S. Meanwhile, it cut or eliminated its investments in Wendy’s/Arby’s Group, Dr Peppper/Snapple, Sears, American International Group, MasterCard Inc. and Wachova.

Meanwhile, Pershing Square and another of its target companies, bookseller Borders Group, have agreed to delay the hedge fund’s purchase of Borders’ British affiliate. The two have also pushed back a deadline for Borders to repay a $42.5 million loan from the hedge fund.

The delay is the second for both deals: Pershing Square’s option to buy Paperchase, Borders’ U.K.-based gifts and stationary business, was originally to expire in January, the same time Borders was supposed to pay back the senior secured term loan. Another deadline came and went Monday, with the agreement to delay things until April 15. At least.

Pershing Square is the largest investor in Borders, with a 17.5% stake.

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