Summary
Although it costs target over $11 million and diverted thousands of hours of executive's time, Target can still be proud of the overwhelming vote of confidence they received from their stockholders in the battle with Mr. Ackman's efforts to transfer the value of Target's real estate portfolio to the stockholders of his Pershing Square Capital fund.
Analysis
For the second time Mr. Ackman has been unable to convince the shareholders of Target that he knew more about what was good for Target than did the very competent executives running the company.
I consider this a very good sign that shareholders in conservative, well run companies like Target are no longer going to be fooled into allowing a slick talking hedge fund operator to load up the company with debt just to enrich the hedge fund stockholders and possibly bankrupt the retailer in the long term.
If successful, Mr. Ackman's plan would have significantly increased both the debt load and occupancy costs of Target. While Mr. Ackman is correct that it would provide immediate cash to distribute to the shareholders, he neglected to mention the terrible impact it would have on Target's bottom line. He also failed to mention how badly he misjudged the ability to convert real estate assets to cheap financing when he and his buddy Eddie Lampert tried to do that while he was a major shareholder in SHLD. In fact very few of the prominent analysts are even mentioning, much less apologizing, for misleading their readers by echoing Messrs. Ackman and Lampert's claims about how they were going to "monetize approximately $20 billion of SHLD's hidden real estate value".
Apparently it was so hidden that neither could ever find it. Why Mr. Ackman then decided to try the same thing with Target is a mark of his continued lack of understanding of the retail industry.
