Ackman in overdrive

Bill Ackman had a busy day Monday touting the merits of his alternate slate of directors in advance of Target’s May 28 shareholders meeting. The Pershing Square hedge fund manager spent two hours on the set of CNBC’s morning show “Squawk Box,” where anchors hailed him as a legendary investor and touted the exclusive nature of his appearance. After departing the studio, it was on to an opening invitation town hall meeting elsewhere in Manhattan, where he discussed the need for change at Target and the merits of his board nominees.

While Ackman’s status as a legendary investor can be contested, there’s no denying he is an articulate proponent of his cause and in the case of his CNBC appearance, as well suited to television as any of the anchors on the morning show. Ackman comes across as credible as he argues for change and the need to replace Target board members standing for re-election. He contends the two issues that must be addressed at Target involve the company’s credit card business and the “Expect More, Pay Less” brand-positioning that isn’t resonating with customers. Ackman contends there is a conflict between a retailer operating a credit business and selling merchandise since it can influence sales by extending credit even though customers may not be credit-worthy. Target’s financial results have been negatively affected by credit operations as increased funds were set aside to allow for doubtful accounts and cover write-offs. As for the “Expect More, Pay Less” issue, Target should be doing well during the current economic situation because of its discount roots; however, the company overshot on the “Expect More” side of the brand equation. Ackman also takes exception to the lack of stock ownership among members of the board and their experience, which, although considerable, isn’t in areas relevant to Target.

“The quality of people on the board is excellent, but it is time for a changes and new thinking,” Ackman said, equating boards to friendly clubs where no one is likely to suggest it is time for another member to leave. “Who other than a shareholder is going to come along and say it is time to go?”