Best Trade Ever - Ackman Scores Big on Longs Drug Stores (LDG)

Bill Ackman just scored a major win with Longs Drug Stores (NYSE: LDG) tonight. A few minutes ago, CVS (NYSE: CVS) announced that it would acquire the drug store chain for $71.50 per share, a significant premium to the $54.04 close.

On August 5th, Ackman's Pershing Square disclosed an 8.8% stake (3,137,659 shares) in the company. Ackman also has 5,296,896 notional shares underlying certain cash-settled total return swaps, bringing his total economic exposure to 8,434,555 shares of Common Stock (approximately 23.6% of the outstanding shares of Common Stock).

Ackman paid $136,609,962 for these positions. The total value of the shares Ackman controls, at the buyout price of $71.50, is worth $603,070,682.

As Ackman just started accumulating shares in late June and July in the $40 range, this is an amazing windfall for Ackman and may go down as one of the 'best trades ever.'

Bill Ackman's Pershing Square hedge fund is a long/short equity fund with an activist bent. Ackman holds large positions in Target (NYSE: TGT) and Borders (NYSE: BGP), among others. Ackman proved his acumen as a short seller in 2007/2008 as short positions he held in MBIA (NYSE: MBI) and Ambac (NYSE: ABK) proved to be big winners due to the credit crunch.

Ackman's Pershing Square Builds 8.8% Stake in Longs Drug Stores (LDG)

In a 13D filing on Longs Drug Stores (NYSE: LDG), Bill Ackman's Pershing Square Capital hedge fund disclosed an 8.8% stake (3,137,659 shares) in the company and noted they have hired advisors and may meet with management or others regarding the business.

From the Filing:

"Representatives of the Reporting Persons may in the future meet with management of the Issuer, other stockholders of the Issuer or other relevant parties to engage in discussions that may include matters relating to the strategy, business, assets, operations, capital structure and/or financial condition, governance, management, strategic plans of the Issuer, and future plans of the Issuer... The Reporting Persons have engaged advisors and may engage additional advisors."

Bill Ackman's Pershing Square hedge fund is a long/short equity fund with an activist bent. Ackman holds large positions in Target (NYSE: TGT) and Borders (NYSE: BGP), among others. Ackman proved his acumen as a short seller in 2007/2008 as short positions he held in MBIA (NYSE: MBI) and Ambac (NYSE: ABK) proved to be big winners due to the credit crunch.

CNBC Faber Notes Letter To Clients From Ackman's Pershing Square on Target (TGT)

On CNBC, David Faber noted a recent letter that William Ackman's Pershing Square Capital sent to investors in their Pershing Square IV fund related to the fund's Target (NYSE: TGT) investment.

Pershing Square owns a nearly 10% stake in Target, mostly through options.

Faber noted that Pershing Square is significantly underwater on the position due to Target's weak stock performance.

In the letter, Ackman said they believe the stock is significantly undervalued. Ackmam supports the company's decision to postpone the sale of the receivables unit due to the weak credit markets. Ackman said the stock could go to $120 in three years if the company completes the stock buyback, sells the credit card unit and explores a potential real estate transaction.

Ackman's Pershing Square Boosts Target (TGT) Stake to 9.97%

In an amended 13D filing on Target (NYSE: TGT), William Ackman's Pershing Square disclosed a 9.97% stake (82,797,200 shares) in the company. This is up from the 9.6% stake (81,761,411 shares) the firm held in a past filing.

Much of Ackman's position in held through call options, exercisable through dates ranging from October 2, 2008 to April 6, 2009.

Pershing Square noted that their representatives have met and may in the future meet with Target's management to engage in discussions that may include matters relating to the strategy, business, assets, operations, capital structure and/or financial condition in an effort to enhance shareholder value.

Ackman's Pershing Square Raises Stake in Borders (BGP) By More Than 3M Shares

In an amended 13D filing after the close Friday on Borders Group (NYSE: BGP), William Ackman's Pershing Square Capital hedge fund disclosed they raised their stake in the book retailer to 17.1% (10,075,580 shares).

Ackman's hedge fund held 6,855,580 shares of Borders at the quarter ended September 30, 2007.

Ackman also owns a large stake in Borders' rival Barnes & Noble (NYSE: BKS).

What could be notable here is that Borders' executives have also been adding to their positions as the stock trades just above their lows. Today, it was disclosed that CEO, George L. Jones, recently bought 50,000 shares.

Recently an analyst at Stifel Nicolaus said Borders management showed evidence a turnaround could be happening. Stifel has a Buy rating and $25 price target on Borders. The stock is currently trading at around $12.

Ackman's Pershing Square Changes Filing Status on Borders Group (BGP) to 13D, Stake Unchanged

In a 13D filing on Borders Group, Inc. (NYSE: BGP), William Ackman's Pershing Square Capital disclosed an 11.7% stake (6,855,580 shares) in the company and said the company contacted them about certain corporate governance and other matters including the composition of the Board of Directors.

The 11.7% stake disclosed in today's' filing is identical to the shares held by the firm at quarter ended June 30, 2007. Pershing Square previously filed its position in a 13G filing, which would indicate a "passive investment."

Pershing Square said the change in filing status from 13G to 13D was not related to activities that have the purpose or effect of changing or influencing control of the company.

From the Filing:

"Representatives of the Issuer recently solicited Pershing Square's views regarding certain corporate governance and other matters including the composition of the Issuer's Board of Directors. The Reporting Persons filed this Schedule 13D to permit free communication between the Issuer and Pershing Square on this and other topics.

Prior to the date hereof, the Reporting Persons had on file with the Securities and Exchange Commission a Schedule 13G with respect to their beneficial ownership of Common Stock. Although the Reporting Persons do not believe that Pershing Square's providing its views or engaging in communications as described above would constitute activities that have the purpose or effect of changing or influencing control of the Issuer, the Reporting Persons are filing this Schedule 13D in order to remove any possible impediment to providing such views or engaging in such communications."

Ackman Takes Stake in Another Large US Retalier, This Time It's Sears (SHLD)

At a charity event in Dallas yesterday William Ackman, the owner of activist hedge fund Pershing Square Capital, told the audience that he owns a 5 million share stake in Sears Holdings Corporation (Nasdaq: SHLD). Ackman also indicated that he was thrilled with the efforts of Sears' Chairman Eddie Lampert and was looking forward to working with him.

A 5 million share stake in Sears would give Ackman's firm 3.5% of the outstanding stock.

Ackman's firm recently accumulated a large stake in another large US retailer, Target (NYSE: TGT). Following Ackman's involvement, Target said they would review alternatives for their credit card receivables.

Last year, Ackman won a battle against Lampert's Sears Holdings when the Ontario Securities Commission killed the company's $899 million takeover of Sears Canada. Ackman argued that Sears Canada was worth at least twice what Lampert offered.

Indications from Ackman's comments is that he will not take a combative activist bent with the Sears investment and will look at it as more of a partnership.

Ackman's Pershing Square and Other Notable Hedge Funds Buy Into Greenlight Capital Re, Ltd. (GLRE)

In an amended 13F yesterday, William Ackman's Pershing Square Capital disclosed a 250,000 shares stake (0.84%) in property and casualty reinsurance company Greenlight Capital Re, Ltd. (Nasdaq: GLRE), a recent IPO.

There are some other notable hedge funds names that own small stakes in Greenlight Capital Re: SAC Capital (100K shares), Third Point LLC (800K shares), Third Avenue Management (300K shares), Maverick Capital (100K shares), Blue Ridge Capital (200K shares).

Why all the interest from hedge funds in Greenlight Capital Re, Ltd.? Well, Greenlight Capital Re Ltd. is led by David Einhorn, a successful hedge fund manager who founded $3 billion hedge fund Greenlight Capital LLC. Einhorn will manage the investments of Greenlight Capital Re, Ltd and the strategy will include long and short positions in equities, according to the company's prospectus. Einhorn has posted an annual percentage gain of 29% over the last 10 years for his Greenlight Capital hedge fund, so the company's investments appear to be in good hands.

New Trades From Top Activists

Here are a few intereting new trades put on from some of our favorite activist funds as disclosed in their lastest 13F filings (Qtr Ended 06/30/07). The stakes mentioned below are all under 5% so no 13Ds are required and the stakes are not nessecarly 'active', but we thought were interesting.

Williamn Ackman's Pershing Square Capital noted a new 10.3 million share stake in office product retailer Staples Inc. (Nasdaq: SPLS).

Jana Partners noted a new 6.5 million share stake in cable company Charter Communications Inc. (Nasdaq: CHTR), a new 725K share stake in broker Goldman Sachs (NYSE: GS), and a new 3 million share stake in rail service company Trinity Industries Inc. (NYSE: TRN).

Robert Chapman's Chapman Capital disclosed a a 460K shares stake in market research firm Harris Interactive Inc. (Nasdaq: HPOL).

Dan Loeb's ThirdPoint disclosed a new 9.65 million share stake in business software company BEA Systems Inc. (Nasdaq: BEAS), a 2.75 million share stake in REIT Douglas Emmett Inc (NYSE: DEI), and a 1.4 million in Veeco Instruments Inc. (Nasdaq: VECO). A full summary of Loeb's 13F is here.

Carl Icahn's Icahn Management's disclosed a new 2.4 million share stake in department store operator Macy's, Inc. (NYSE: M), a 3.5 million share stake in aluminum company Alcoa (NYSE: AA) and a 3.9 million share stake in packaged foods maker Kraft Foods Inc. (NYSE: KFT). A full summary of Icahn's 13F is here.

MMI Investments disclosed a small 138,300 share stake in utility National Fuel Gas Co. (NYSE: NFG)

Warren Lichtenstein's Steel Partners II disclosed a new 2 million share stake in home improvement retailer Home Depot (NYSE: HD), a 642K share stake in adult entertainment company Playboy Enterprises Inc. (NYSE: PLA), a 4.4 million share stake in oil driller Pride International Inc. (NYSE: PDE)

Atticus Capital disclosed a new 1.6 million share stake in heavy equipment maker Caterpillar Inc. (NYSE: CAT), a 2.1 million share stake in electric utililty Entergy Corp. (NYSE: ETR), and a new 4.6 million share stake in oil driller Transocean Inc. (NYSE: RIG).

Credit Squeeze Making Activists Back Off Merger Opposition

In an amended 13D filing on Acxiom Corp. (Nasdaq: ACXM), large holder MMI Investments said it has determined not to solicit proxies in opposition of the Proposed Merger of the company with Silver Lake and ValueAct Capital, for cash consideration of $27.10 per share. MMI said it has reassessed the Proposed Merger in view of the substantial and unanticipated deterioration in conditions within the equity and debt markets.

Acxiom is currently selling at $22.40, well below the $27.10 acquisition price.

MMI Investments said it reserves the right to pursue its nominations for election as directors at the Issuer's 2007 Annual Meeting of Shareholders if the Proposed Merger is not consummated.

William Ackman's Pershing Square Capital made a similar move related to his opposition of the takeover of Ceridian Corporation (NYSE: CEN) by Thomas H. Lee Partners, L.P. and Fidelity National Financial. On Friday, Pershing Square said it would support the deal citing concerns in the credit markets.

Ceridian is trading at $31.68, well below the deal price of $36.

Pershing Square said it would continue to pursue its previously announced proxy contest to replace the board, citing on-going concerns regarding credit and broader markets as well as the buyout group's walk-away right if it chooses to pay a $165 million break-up fee.

Spencer Raises Stake in Borders Group (BGP), Cohen Takes 5% Passive Stake

In an amended 13D filing after the close Friday on Borders Group (NYSE: BGP), Spencer Capital discloses a 7.9% stake (4,628,102 shares) in the company. This is up from the 6.8% stake the firm disclosed in the original 13D filing in July.

The firm bought 94,001 shares on 08/01 and bought options on 526,000 shares on 08/01.

In the original 13D filing (July) the firm said, "In late June 2007, representatives of the Filers had conversations with the chief financial officer of the Company concerning the business of the Company. The Filers intend to seek to engage in further discussions with members of the board of directors or management of the Company and to discuss with them the business of the Company. Based on discussions with these or any other representatives of the Company, the Filers may formulate plans or proposals with respect to the Company.

Interestingly, Steve Cohen's SAC Capital also disclosed a new 5.1% "passive" stake in Borders Group on Friday.

The stock is at a 52-week low, and with Spencer Capital, SAC Capital, Citadel, and Bill Ackman's Pershing Square Capital all involved with the stock, I would be looking for some head bashing to get the stock moving.

Ackman's Pershing Square Accumulates Nearly 10% Stake in Target (TGT)

As was widely reported last week, William Ackman's Pershing Square Capital disclosed a large stake in Target (NYSE: TGT) this morning in a 13D. What was surprising to me was the size of the stake. Ackman's firm accumulated control over 9.6% (81,761,411 shares) of the stock in the huge retailer. Wow, nearly 10% of a $60 billion company! Amazing!

How did he do it? With options of course. Ackman owns options to purchase 79,213,351 TGT shares with strike prices ranging from $34.63 to $53.12 and exercisable through dates ranging from December 14, 2007 to April 6, 2009.

This goes to show that no company, no matter how big, is safe from activists. In a short time, a small group (or one firm in this case) can take large chunks of a company and impose their will.

Is this positive or negative for corporate America?

My view is that it is mostly positive (80/20). Positive in that it keeps management on their toes and working for the shareholders. Negative in that hedge fund managers who run money for a living are making suggestions on how to run huge corporations which they may know nothing about.

What do you think?

Reports Ackman's Pershing Square Accumulated 5%+ Stake in Target (TGT)

According to reports from Bloomberg, activist investor William Ackman, through his Pershing Square hedge fund, has built up a greater than 5% stake in Target (NYSE: TGT), citing a person with knowledge of his actions.

Ackman is expected to disclose the stake shortly, as would be required by SEC rules.

Recent reports suggested Ackman raised $2 billion that was to be used in a new fund that will focus on just one large "iconic American" company.

Spencer Capital Discloses 6.8% Stake in Borders Group (BGP), Discloses June Talks

In a 13D filing on Borders Group (NYSE: BGP), Spencer Capital discloses a 6.8% stake (4,008,101 shares) in the company.

In the filing the firm said, "In late June 2007, representatives of the Filers had conversations with the chief financial officer of the Company concerning the business of the Company. The Filers intend to seek to engage in further discussions with members of the board of directors or management of the Company and to discuss with them the business of the Company. Based on discussions with these or any other representatives of the Company, the Filers may formulate plans or proposals with respect to the Company."

Also remember, Williman Ackman's Pershing Square Capital owns an 11.7% stake in Borders. Pershing Square also holds a big stake in Borders' rival Barnes and Noble (NYSE: BKS). There has been talk in the past he could push the two to merge.

It is not great news for management, but possibly good for investors, when two activist investors are in your top 4 holders.

Ackman's Pershing Square Discloses 1.92M Share Stake in Legg Mason (LM)

William Ackman's Pershing Square Capital disclosed they held a 1.92 million share stake in Legg Mason (NYSE: LM) at the quarter ended March 31, 2007. Pershing Square disclosed the stake today after confidential treatment, which concealed the stake, expired.

William Ackman is known as an activist investor.

Ackman's Pershing Square Capital Opposes Sale of Ceridian (CEN) at Current Price

In an amended 13D filing on Ceridian Corporation (NYSE: CEN), William Ackman's Pershing Square Capital, a 14.9% holder, disclosed a letter indicating they don't support a sale of the company at $36 per share.

Ackaman said, "In our view, the value-maximizing course of action is the pursuit of one or a combination of the following alternatives: (1) a sale of the entire company at a higher price, (2) a sale or separation of one or both of the company’s main operating units, and/or (3) a recapitalization, dividend or self-tender transaction where significant value can be returned to stockholders, whether in combination with a broader transaction or otherwise."

A Copy of the Letter:

Dear Fellow Ceridian Owners:

As you know, the incumbent board of Ceridian Corporation has embarked on a path to sell the company to a consortium of buyers at $36 per share. We do not support a sale of the company at this low price. It appears to us that the current deal is an ill-suited response to our proxy contest, and is suboptimal for Ceridian stockholders.

We have retained Lazard Frères & Co. LLC as our financial advisor and are working with Sullivan & Cromwell LLP as our legal advisor. We intend to pursue one or more value-maximizing alternatives. Since the announcement of the current deal, we have received expressions of interests from both strategic buyers and financial sponsors who are interested in pursuing a variety of possible transactions.

In our view, the value-maximizing course of action is the pursuit of one or a combination of the following alternatives: (1) a sale of the entire company at a higher price, (2) a sale or separation of one or both of the company’s main operating units, and/or (3) a recapitalization, dividend or self-tender transaction where significant value can be returned to stockholders, whether in combination with a broader transaction or otherwise.

Investment funds managed by Pershing Square Capital Management, L.P. may participate in sponsoring one or more of these alternative transactions, which could involve additional strategic partners or financial sponsors. We expect, therefore, to approach the company to seek information relevant to our formulation of a more definitive proposal.

Should Ceridian have obtained standstill agreements from any potential bidders, we believe that the incumbent board’s fiduciary duties require Ceridian to waive those standstills and cooperate to enable this process to achieve the highest value reasonably obtainable for all Ceridian stockholders. We ask that you send this same message to the company.

PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

Sincerely,

William A. Ackman

Could Ackman's Target Be Sears, Not Bud?

According to reports from Chicago Sun-Times, activist investors William Ackman, who runs hedge fund Pershing Square Capital, could target Eddie Lampert's Sears Holdings (Nasdaq: SHLD) for his latest venture that will target just one large "iconic American" company. Yesterday, reports from the New York Post speculated that Anheuser-Busch (NYSE: BUD) would be Ackman's target.

The Chicago Sun-Times noted that last year Ackman won a battle against Lampert's Sears Holdings when the Ontario Securities Commission killed the company's $899 million takeover of Sears Canada. Ackman argued that Sears Canada was worth at least twice what Lampert offered. The article also said Ackman's most successful moves have been at retailers and restaurants.

The original article from the New York Post said that Ackman told investors that the $2 billion raised for the new fund will be used to buy a controlling interest in a $30-$40 billion company and prospective investors said the company has three divisions. Sears does operate three segments: Kmart, Sears Domestic, and Sears Canada and has a market cap of about $27 billion. Anheuser-Busch's market cap is just north of $40 billion.

Other names mentioned as possible targets for Ackman were Starwood (NYSE: HOT), Marriott (NYSE: MAR) and Kraft (NYSE: KFT).

Link to Chicago Sun-Times Article. Link to NY Post Article

NOTE: Lampert controls 43% of SHLD, so it would look like a nearly impossible feat to get anything meaningful done.

Anheuser-Busch (BUD) Higher On Speculation Activist Investor Ackman Could Be Targeting the Company

Shares of Anheuser-Busch (NYSE: BUD) are higher today on speculation the company could be an activist target of William Ackman, though his Pershing Square hedge fund, which just raised $2 billion that it will be used to focus on one large "iconic American" company.

According to reports in the New York Post, Ackman told investors the money will be used to buy a controlling interest in a $30-$40 billion company and prospective investors said the company has three divisions. Ackman declined to comment.


Other names mentioned as possible targets for Ackman were Starwood (NYSE: HOT), Marriott (NYSE: MAR) and Kraft (NYSE: KFT). Link to NY Post Article

Pershing Square Seeks Clarification of Ceridian (CEN) Annual Meeting Date

In a 13D filing on Ceridian Corporation (NYSE: CEN), 14.5% holder Pershing Square Capital disclosed a recent letter to the company requesting clarification of the date on which Ceridian expects to call the next annual meeting. The firm said the company needs to correct the misimpression left by yesterday's earnings call that suggested the annual meeting will be held by June 11.

Pershing Square is seeking to nominate a slate of alternative directors at Ceridian's annual meeting.

A Copy of the Letter:

Dear Mr. Nelson:

As you know, certain funds advised by Pershing Square Capital Management,L.P. intend to field a slate of alternative directors at Ceridian Corporation's2007 annual meeting of stockholders. Based on remarks on yesterday's earningscall, we believe an incorrect statement was made as to when Ceridian's annualmeeting will be held. In your capacity as Ceridian's corporate secretary, werespectfully request clarification of the date on which Ceridian expects to callthe next annual meeting.

On yesterday's call, in response to a question concerning the latest datethe annual meeting would be held, Ms. Marinello identified the 13-monthanniversary of last year's meeting as the relevant time frame under Delaware lawfor this year's annual meeting and stated the meeting would be held within therequired period. Given that Ceridian's 2006 annual meeting was held on May 11,2006, this year's annual meeting is required to be held no later than June 11,2007. We do not believe that this is possible as a theoretical or practicalmatter. Without clarification on your part, on the basis of yesterday's call,the investment community has been and will continue to be misinformed.

Ceridian originally notified the New York Stock Exchange of record andmeeting dates of February 28 and April 26, 2007, but subsequently advised theExchange that those dates would be changed. To our knowledge, no additionalnotice has been given. As you know, Ceridian must give the New York StockExchange 10 days advance notice of a record date, and Rule 401.03 of the ListedCompany Manual recommends a minimum of 30 days between the record and meetingdates. Ceridian must also file its preliminary proxy materials with theSecurities and Exchange Commission 10 days prior to mailing definitivematerials, and no preliminary materials have been filed. In the context of acontested board election, a solicitation period of less than one month isvirtually unheard of.

Accordingly, we believe that Ceridian cannot, and is not planning to, holdan annual meeting by June 11 in light of the requirements of the New York StockExchange and the federal securities laws, as well as the practical need tosolicit proxies in a contested election.

Delaware law takes the annual election process seriously. We, too, view theexercise of our franchise as fundamental to our investment and of paramountimportance to the future direction of Ceridian's business and affairs. At therisk of understatement, it would be unfortunate if Ceridian's failure to holdthe 2007 annual meeting on a timely basis is the result of an attempt tofrustrate a stockholder vote.

As the largest stockholder of Ceridian, we hereby request you to correctthe misimpression left by yesterday's call, and inform all stockholders of whenthe annual meeting will be held.

PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

Very truly yours,

Roy J. Katzovicz

Reports Relational Investors Sold Remaining Stake in Ceridian (CEN)

According to reports from Reuters, activist fund Relational Investors said they sold their remaining shares in Ceridian Corp. (NYSE: CEN). According to the report, Relational Investors' principal Ralph Whitworth said the firm has "bigger fish to fry."

Ceridian is also an activist target of Bill Ackman's Pershing Square Capital, which wants the company to spin-off its Comdata division and is seeking to replace the board.

In a letter to Ceridian's Chairman earlier in the year, Relational Investors said they would support each of the points made by Pershing Square. In the same letter, Relational Investors noted they decided to begin selling their position having experienced many of the same frustrations expressed by Pershing Square.

In February, Ceridian announced that its Board of Directors has decided to explore a broad range of strategic alternatives to enhance shareholder value.