Activist hedge fund manager William Ackman laid out a detailed plan for boosting Target's stock price, in his fullest explanation yet of why he has amassed nearly 10 percent of the discount retailer's shares.

Ackman, who until now has kept largely silent about the reasons for his Target investment except noting that his family shops there, believes the discount retailer's stock is severely undervalued and can more than double in value if the company makes a series of moves to unlock the value of its assets.

In a Dec. 27 letter to his investors, Ackman said Target's stock can hit $120 a share within three years if the company completes a previously announced $10 billion share buyback; sells its $8 billion in credit-card loans, a move it is considering; and extracts cash through its sizable real estate portfolio, which it has not discussed.

He estimated Target's real estate is worth $42 billion, approximately the same as its stock market value.

A Target spokeswoman declined to comment on Ackman's letter and his numbers.

Ackman wrote, "In our view, the stock market gives Target no credit for its large and valuable real estate portfolio."

Unlike many other major retailers, Target owns most of its real estate in order to retain control over stores and avoid complicated leases.

Still, in November, Target increased its share buyback program from $8 billion to $10 billion over three years. And after years of saying it wouldn't sell off its credit-card business, it announced in September that it was considering a sale of the receivables. In his letter, Ackman said he met with management in early August to discuss both of those moves.

Meanwhile a general economic slowdown and a lackluster holiday shopping season have taken a toll on Target's stock price, which has plunged 29 percent since mid-July. The stock fell 49 cents Wednesday to $49.51 a share from $50 a share.

In his Dec. 27 letter, Ackman noted that Target owns a larger percentage of its real estate than any other major retailer. Target owns 95 percent of its buildings. Ackman wrote he anticipates discussing his real estate analysis with Target early this year.

"We believe that there are transactions that will enable Target to monetize the company's real estate and development business in a tax-efficient manner," he said.

Chris Serres • 612-673-4308