Soros bets bigger on Target

  • Article by: THOMAS LEE , Star Tribune
  • Updated: August 31, 2011 - 7:43 AM

George Soros' investment firm acquired nearly 544,000 shares, even as it sold stock of other retailers.

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Soros Fund Management Chairman George Soros

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An investment fund controlled by billionaire George Soros has significantly boosted its stake in Minneapolis-based Target Corp.

Soros Fund Management in New York, whose portfolio is worth more than $7 billion, purchased 543,900 shares of Target stock in the second quarter, according to documents filed with the Securities and Exchange Commission. Overall, Soros owns 552,600 shares, or 0.08 percent of the retailer, which the investment firm valued at $25.9 million, the filing says. (State Street Corp., Target's largest investor, owns 63.5 million shares, or 9.4 percent of the company.)

In an e-mail, Soros spokesperson Michael Vachon declined to comment.

Known for his outspoken politics, Soros has established himself as a savvy investor, especially with currencies. In one of his most famous exploits, Soros in 1992 shorted $10 billion worth of the British pound, betting correctly that Great Britain would allow the currency to devalue in relation to other currencies such as the German mark.

"When Soros takes a stake, it certainly draws attention" like Warren Buffett, said Glenn Johnson, a portfolio manager with Mairs & Power in St. Paul, which owns 2.7 million shares of Target stock. "But what are Soros' real intentions? Who knows?"

Unlike activist investor William Ackman, who recently abandoned his effort to force Target to sell and lease back the land beneath its stores, Soros is a longer-term investor whose holdings include AT&T, Boeing and Kraft Foods.

Soros is betting on Target stock, even though the fund is generally bearish on retail. In the second quarter, the fund bought additional shares in Ralph Lauren (494,244) and Lowe's (298,000) but also reduced its retail holdings, including Macy's (-121,700), JCPenney (-12,300), and Amazon.com (-280,655).

Target's second-quarter profit rose 3.7 percent to $704 million, or $1.03 a share, beating Wall Street estimates by 6 cents a share. Earlier this month, Target said sales at stores open for at least a year rose a solid 3.7 percent, thanks to sales of food, housewares and health and beauty. Target executives have said back-to-school sales were off to a good start.

Target stock has languished this year, dropping about 16 percent. Johnson, however, says Target's stock decline has more do to with broader worries about the economy.

"We certainly like the direction the company is going," said Johnson of Mairs & Power, which purchased an additional 91,382 Target shares in the second quarter. "We have a high degree of confidence in their longer-term outlook and we saw this as an opportunity to buy more shares at an attractive price."

The stock traded at an average price of $48.97 in the second quarter. Shares closed Tuesday at $50.96, which suggests Soros has already made a positive return on his investment.

Thomas Lee • 612-673-4113

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