Updated to include comments from Macy's.

NEW YORK (TheStreet) -- Like much of its merchandise, Macy's (M) - Get Report stock may be on sale. That is according to one prominent money manager.

"We believe there is an opportunity to create two leading companies while maintaining the dividend," Starboard Value CEO Jeff Smith said at the Delivering Alpha investment conference on Wednesday.

One of those companies would be the retail store operations, the other a separate holding company for Macy's valuable real estate. Smith, the most prominent big investor to come out in favor of Macy's spinning off its prime real estate, said he believes the stock would be worth $125 a share if the retailer took undertook such a tactic.

Shares of Macy's were trading at under $67 before Smith made his remarks on Wednesday, but subsequently spiked by as much as 8.5%. They closed at $72.01, up 7.9%.

In an emailed statement to TheStreet, Macy's said "We recognize the potential attractiveness of real estate investment trusts and similar alternative real estate ownership structures in today's marketplace. We are currently evaluating those structures including analyzing the various economic, tax, operational and other issues associated with them."

Starboard's Smith isn't alone in his desire to push for change at the storied retailer. According to a Reutersreport on June 2, multiple unnamed hedge funds have amassed stakes in Macy's in recent months, and have held conversations with management about implementing the strategy. Macy's and its financial advisers have been listening to the proposals, according to the Reuters report.

On May 13, TheStreethighlighted the prospect of such a real estate transaction. "We are studying various transactions and their pros and cons", Macy's Chief Financial Officer Karen Hoguet said on the company's first-quarter post-earnings conference call.

"We are getting questions also," Hoguet replied to a stock analyst who said he had received inquiries from his firm's investors on the real-estate issue. According to Hoguet at the time, Macy's was studying "many" opportunities, but noted that so far, nothing had made strategic sense and any deal involving real estate would be complicated. Macy's reluctance to spin off its real estate means it could soon face a fight with Smith and other unnamed investors.

It wouldn't be the first time Macy's has generated cash by unloading real estate, but investors are calling for a much larger scale deal. Last October, Macy's sold its Cupertino, Calif., location to real-estate developer Sand Hill Property for an undisclosed amount. Macy's joined fellow mall anchors J.C. Penney (JCP) - Get Report and Sears Holdings (SHLD) in selling their Cupertino locations to Sand Hill.