Hedge-fund tycoon Bill Ackman converted most of his options in Target to stock, effectively lowering his interest in the cheap-chic retailer after a failed effort to shake up the company’s board in May.
Ackman — who had sought to replace five Target directors after the discount chain rejected his idea to spin off its real estate last year — cut his interest in the company to 4.4 percent from 7.8 percent, according to securities filings.
Having allowed some out-of-the-money options to expire, Ackman has lowered his profile with Target and is no longer required to make regular public filings as a shareholder.
However, Ackman also converted some options to stock, increasing his ownership of common shares to 3.5 percent from 3.3 percent. With just 0.9 percent of his interest now in options, Ackman appeared to some to be taking a longer-term perspective on his investment.
That could help Ackman fend off criticism — stoked by Target CEO Gregg Steinhafel in a bitter proxy contest this spring — that he’s out to make a quick buck and doesn’t have the retailer’s best interests at heart.
While Ackman had raised hackles this spring about the quality of Target’s board, “the fact that he remains steady on his investment suggests that he’s content with the current direction of the company,” said Charles Elson, a corporate-governance expert at the University of Delaware.
Some observers speculated that despite his dramatic setback in May, Ackman might try to mount yet another proxy battle in 2010.
“Anything is possible, but that was a pretty tough defeat,” Elson said. “It all really depends on what happens to the company in the next six months.”