Sunday, May 10, 2009

Cheering for Bill Ackman at Target (TGT)

I read Jesse Eisinger's great profile of Bill Ackman of Pershing Square in my final copy of Portfolio Magazine.

Bill took some shots when his Target (TGT)-only fund was down 93% earlier this year. He had to apologize to his investors, loosen the fund terms and injected $25 million personally into the fund. AG Andrew Cuomo even called Ackman up to compliment him for how he handled the situation.

The last I heard, Ackman's TGT-only fund's return was -50% -- still a big loss, but a remarkable achievement in a little over a month off the bottom. This jump corresponds with TGT's move from its early March bottom of $25 to around $40 today.

Ackman's results show how quickly a one-investment fund, combined with the use of options, can see performance dramatically increase (or decrease). (Ackman has already said he'll likely never do a single investment-fund again.) There is still a good chance that this formula will assure he returns all the original money to his investors and, who knows, maybe even return them a small profit.

I'll be cheering for Ackman. He's got ideas in spades, which is something the world needs more of these days. And, besides, who doesn't love a happy ending?

Position: None.

Originally published in on 5/6/2009 1:37 PM EDT

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