NEW YORK (TheStreet) -- Shares of Dillard's (DDS) were gaining 8.6% to $120.29 Thursday following reports that activist hedge fund Marcato Capital Management is asking the department store operator to spin off its real estate assets into a real estate investment trust.
Marcato said that creating a REIT could "unlock tremendous value" for the retailer and its shareholders, according to the Wall Street Journal. The hedge fund said that after creating a REIT, the value of both it and Dillard's could reach a combined stock price of $193 a share, a 75% increase from current levels.
Marcato Capital currently holds a 4.9% stake in Dillard's.
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TheStreet Ratings team rates DILLARDS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DILLARDS INC (DDS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, reasonable valuation levels and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."