I'm voting NO to anything Pershing Square proposes! Exhibit A: Wendy's.
Wendy's acquired Canada's top brand Tim Hortons for what I recall was 10% of Wendy's stock... eventually, TH grew to over 50% of Wendy's revenues, with many co-branded Wendy's/Tim Hortons stores, that would help the Wendy's brand in Canada, and the TH brand in the U.S.
Then due to hedge fund pressure, they spun off their golden goose, Tim Hortons, and suddenly US investors were surprised to see without it Wendy's had next to no earnings. So Wendy's board decided that the best strategic alternative was to merge with Arby's. Look where that stock is now. A quick google search revealed Pershing Square has since gotten rid of much of it's Wendy's-Arby's stock. In the long run, I think Wendy's would have been a much better company without these short term inspired moves.
have to take into account horton's performance as a spin-off. wendy's shareholders didn't just lose horton's. it was spun-off, which means they got shares in the new entity free. add up the two separate entities and its a better deal...
I'm still trying to figure out what your point is here, gw. Wendy's shareholders SOLD Thorton's - they didn't merely give it away.
"...In the long run, I think Wendy's would have been a much better company without these short term inspired moves..."
So, if I recall right, Wendy's gets rid of Baja Grill (no big loss) and Tim Hortons. Wendy's shareholders got Horton's shares as a stock dividend at, what you can argue at the time, was a pretty good price.
Even if they never spun off Thorton's, Wendy's stock would have continued to deteriorate - just a little more slowly with Thorton's propping it up. On the other hand, the value of Thorton's would have been seriously hurt by Wendy's constantly leeching away it's profits.
So you're saying that you would rather have seen both go down no matter what - just to keep the Wendy's side going a little longer? Wasn't it in the shareholder's best interest to at least retain and preserve the value of the 'good' part of the business with a THI shares even if that meant that Wendy's shares would have to stand on their own?
Wendy's get's Thorton's for a bargain. Wendy's starts floundering with the loss of Dave, the economy, etc. Thorton's does pretty well during the same time. Now Thorton's is somehow responsible for keeping Wendy's on life support?
It's not a responsible way to use the assets of a publicly held company. Spinning off Thorton's did not *cause* Wendy's problems. Running both companies into the ground in the hopes of 'saving' Wendy's would have been an absolute failure.
I would rather be holding THI and WEN shares today than just the shares of whatever a dying Wendy's/Thoron's combination would still look like. Provided the bone-pickers wouldn't have already pounced on what was left of it.
Why would anyone vote with Ackman (unless they were short like he is)? This company is solid. They just opened a new store in Richmond and it is doing fine. My 30 year old daughter says that is where all the young people shop. They and TGT are the future.
Wow, here's an informed investor... how is he short?
From the source (SEC):
"Despite our disappointment with the company’s results, we are shareholders of Target, not Wal-Mart, because we believe that Target has substantial unrealized potential. We believe the company has strong management, talented and hard-working employees, valuable assets, and one of the country’s greatest brands. We believe, however, that Target’s current board composition is suboptimal. On this point, Wal-Mart makes for an interesting comparison."
... in fact the board is who has no stake ...
"The board also has no significant shareholder representation, with the current directors owning less than 0.3% of the company’s outstanding common stock. As such, we believe that the current board is suboptimal from a shareholder and corporate governance perspective."
Read it all here if you care to do any research into your decision before voting:
Clearly, he's not short when he's among the largest shareholders... and you don't even have to vote for him. Vote for the other directors - they are still all better than the existing directors.
Read Pershing Square's proxy materials, watch their presentations, and you might change your mind. Instead of just basing decisions on how many people go into a single new store. The problem is not with management either, it's with the board, which is the reason for this proxy contest.
As for me, I'm voting GOLD.
RETAILING--yes. MONEY CHANGING--no.
Bill Ackman's business is HEDGE fund management, meaning taking high risks to obtain immediate high profits.
I have been a shareholder in the original Dayton Corporation since 1967 when there were just 15 Target stores. Today there are over 1600. The business was built brick by brick on solid footing.
The management has ALWAYS reacted to current market conditions by adjusting, but has NOT jumped to knee-jerk over-reaction which has crippled other companies.
A basic premise taught in marketing 1A is to compete with your competitors on your ground, not theirs. That is what Target has been successful in doing. Five years ago K-Mart announced that they were not going to sit back and let Walmart be the lowest price retailer. They attempted to match Walmart’s prices item by item. Not having Wal-Mart's purchasing power, and sophisticated computerized distribution system, they entered bankruptcy within 24 months.
Mr. Ackman's suggestion to sell off Target's real estate to realize immediate profits endangers Target's future profits and stability. One of the main contributors to Mervyn's bankruptcy was that they no longer had control over their real estate expenses.
Mr. Ackman may now talk a different line, but I for one judge him by his past proposals and am voting to retain the current and very qualified Board and not endanger the future of the company at the risk of possible temporary market gain.
Aaron M. Epstein, N. Hollywood, CA
"...Bill Ackman's business is HEDGE fund management, meaning taking high risks to obtain immediate high profits..."
Immediate? Like he's going to close and liquidate the Target fund next week? His timeframe is YEARS. All hedge funds are not short-term highly speculative gambles. Ackman's investment goal is to leverage with derivatives to multiply the upside of Target - not to somehow bail out three weeks after a price spike. Don't label Persing V a short-term speculative fund when you have never bothered to read the first few sentences of the prospectus. Ackman isn't some kind of daytrader and none of Pershing's hedge funds are short-term. Deriviatives are used for leverage, not daytrading.
"...The management has ALWAYS reacted to current market conditions by adjusting, but has NOT jumped to knee-jerk over-reaction which has crippled other companies..."
Knee-jerk over-reaction? Like dismissing the REIT proposal after one day? The thing must have been hundreds of pages - I doubt anyone on the board even read the whole thing. Looks like a knee-jerk reaction to something they have no clue about. And I'm not sure what kind of carefully-considered 'adjustments' the board was making to underwriting last year that has lead to writing-off $100 MILLION a month in bad credit card debt. Maybe a knee-jerk reaction would have helped!
"A basic premise taught in marketing 1A is to compete with your competitors on your ground, not theirs. That is what Target has been successful in doing."
Except for, oh... the last six months or so. Do you read the paper?
"Five years ago K-Mart announced that they were not going to sit back and let Walmart be the lowest price retailer. They attempted to match Walmart’s prices item by item. Not having Wal-Mart's purchasing power, and sophisticated computerized distribution system, they entered bankruptcy within 24 months."
While the prognosis for Target is perhaps not so dire, they are 1) Attempting to price-match Wal-Mart, 2) Don't have Wal-Mart's purchasing power, and 3) Have as much of a sophisticated computerized distribution system that frat-boy IT managers and $3/hr programmers in Bangalore can crank out. You can go on Wal-Mart's web site and tell if they have items in stock at indivudual stores or, if out, when they expect more at that store. Target corp can barely do this internally and forget about anyone in the store being able to tell you this (much less have customers look it up real time on the internet). I guess online inventory would be a knee-jerk reaction to intertubes technology. Maybe in another decade or two (considering the current board).
"...and am voting to retain the current and very qualified Board..."
Yeah, like the Wells-Fargo CEO Kovacevich. He's done a bang-up job of running the bank... off a cliff! I hope he remembers that he can't count on a taxpayer bailout for Target when he screws it up with his 'qualifications'.
"...and not endanger the future of the company..."
The current board has already endangered the future of the company with their short-sightedness, ineptness and cronyism! At least Ackman is attempting to give the Target board some fresh business minds.
Ackman's strategy is not in the best interest of the company in the long run.
He failed to execute his silly tactic with McDonalds. With luck, he'll fail again.
And why would anyone want to do a big real estate transaction in this market?
White. There is no way I would vote for Ackman and his people. Ackman and his people are doing nothing more than trying to make themselves profit. They are not acting on the best interest of the company. They are acting on the best interest for themselves. Target is doing great without ackman and his group promoting their own self interests.