Activist: Why Ackman Failed vs. Target

For the most part, these strategies have hurt the target companies. There are also many activists, and Carl Icahn is probably the most well-known example, who have cultivated an image of force and intimidation.

Hedge fund managers -- and activists especially -- are still seen by outsiders as short-termists. In the case of Ackman, he is who he is: a big New York hedge fund manager. He can't change that, but that image likely did bleed away potential supporters who, when they reviewed his REIT plan and heard about the number of Target derivatives he owned, prematurely dismissed his slate for not being a "long-term investor." In the final days before the vote, Ackman went out his way to issue press releases saying he was committed to holding his personal Target shares, not his fund's shares, for at least five years if he was elected to the board. By then, it was too late to change how he was viewed by his fellow shareholders.

3. Pick bulletproof fellow directors for your dissident slate. Ackman didn't help himself with the pick of Jim Donald as a fellow director on his slate. In TV interviews leading up to the vote, Donald didn't provide a compelling list of things he was going to attack once he got elected to the board. It fed into the view that Target wasn't really badly in need of improvement.

Ackman made a big deal of Donald's experience heading up Wal-Mart's (WMT Quote) grocery division, pointing out that Target should emulate Wal-Mart's performance there. Yet Donald also brought the baggage of his bio for being ousted from Starbucks(SBUX Quote) by the guy who hired him. It's not necessarily fair, but this baggage diluted the message Ackman was trying to get across.