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Tom Au, CFA
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In the early 1990s, during the middle of a secular bull market, I began work on "A Modern Approach To Graham and Dodd Investing," that was not particularly suited for the decade of the 1990s, but was ideally suited for the following "Lost Decade" of the 2000s.
My book:
A Modern Approach to Graham and Dodd Investing
  • Back From Bill Ackman's Target Town Hall Meeting 0 comments
    May 11, 2009 2:21 PM

    I'm back from Bill Ackman's Town Hall meeting for Target. It was well attended, with many concerned shareholders. He featured an impressive slate of dissident candidates besides himself: JIm Donald, a grocery retailer, Richard Vague, a credit card executive, Micheal Ashner, a real estate mgul, and Ron Gilson, a corporate governance expert at Harvard Business School. Each ot these people has experience facing a key aspect of Target's problems.

    If ever a dissident slate deserved to succeed, it's this one. Target was, and still is, a great deparment store chain, but is having trouble branching out into related areas to fend off more aggressive retaileirs like WalMart. Groceries isn't exactly Target's forte, even though it needs to sell some to pull in traffica for more traditional lines such as apparel. Target may be driving sales by using its credit card operation as a loss leader, even though bad debts are mounting.&nbs... estate, in the form of a publicly-traded "REIT" on company land  could be used to free up cash. An ingrained and unimaginative board is coming up with few new ideas, and the company could find only four directors for five seats, so it proposesd to eliminated one rather than give it to the Ackman group.

    The views of the Ackman group are more nuanced than mine: Transfer only the credit card funding and risk (most, rather than all of the credit card operation.) Do only a parital IPO of the land, rather than spin off the whole real estate operation. A scapel, rather than a sledgehammer. I'm not even sure these measures will be successful, but I give them credit for trying. And Mr. Ackman has a lot more to lose if he's unsuccessful than I do.

    I plan to hold onto my position until the May 28th meeting. After that, we'll see. I"ve made a "turnaround" profit from the recent dip. I'll "let it ride" with Ackman, but not with the incumbents.

    Long TGT stock.

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