Ackman Aims at Target's Land

Blackstone and Ackman declined to comment for this article.

The fact that Ackman is even pressuring Target would have seemed much stranger back in 2003, when he dissolved his first hedge fund, Gotham Partners, because of unprofitable private-equity bets and a swarm of investor redemption demands. New York Gov. Eliot Spitzer, at the time attorney general, also had investigated Gotham about trading and research practices surrounding its investment in Pre-Paid Legal Services(PPD Quote).

After Gotham unwound in 2003, Ackman's comeback trail began with his first major investment idea for his new hedge fund, Pershing Square Capital Management. He purchased stock in Sears Roebuck and Kmart in 2004 before hedge fund guru Ed Lampert later merged the companies into Sears Holdings(SHLD Quote).

Ackman's research into the real estate value at both retailers propelled the respected real estate minds at Vornado Realty Trust to purchase a 4.3% stake in Sears in 2004, says an industry veteran familiar with matter.

"Bill was heavily involved in getting Vornado involved with Sears," the industry veteran says. Vornado also later invested in McDonald's after Ackman's ideas became public.

Whether Ackman ultimately succeeds with Target could depend on whether any of his previous contacts at Lazard, Blackstone or Vornado become involved. For now, this all remains a mystery.

One rival hedge fund manager remains skeptical about how Ackman could possibly convince Target's management that change is needed.

"Yet he always surprises me," he says, "So who knows."