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Ackman's Short Win on Longs
This year has not exactly been kind to hedge fund manager Bill Ackman, in spite of the fact that his name has appeared in the business pages with increased frequency.
The Pershing Square Capital manager has taken it on the chin with some long-term investments like Target, Sears, and Barnes and Noble. He tried to compensate for those duds by becoming an outspoken short-seller of Fannie Mae and Freddie Mac, to no avail. Replicating his winning short bets on the bond insurers has not proven so easy.
But now he has a winner.
Just last week, Ackman's fund disclosed a new stake in Longs Drug Stores -- 8.8 percent of its outstanding shares, plus enough total return swaps to give it an economic exposure to the drug chain of 15.4 percent.
And today, CVS Caremark announced plans to acquire Longs for $71.50 per share in cash, which is a 32 percent premium over its closing price.
Ackman's $136.6 million investment just turned into $180.3 million. Not bad for a week's work.
Making money by selling short is one thing. Going long and winning in a short time frame is quite another feat indeed. Especially on a company named Longs.
Now if only he could do something with Target.
by Megan Barnett
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