Buy Some Furniture, Give the Cat A Name

This is the chart for the performance of Tiffany's common stock over the last six months. As you can see, there was an early peak at $52, then a jagged decline to $36 by early July. It has since risen from that, to the neighborhood of $46, although there was another dramatic-looking dip at the end of August.

That dip may have come about largely because Trian Fund, the investment vehicle of Nelson Peltz, has been selling. Trian still owns a 5.43% stake, whichmakes it Tiffany's biggest stockholder.

Tiffany did better-than-expected in recent quarters. But even that hurts it in Shapira's estimation, because she thinks it did well on the basis of declining commodity prices, and its profit margins are not sustainable.

The relevant Goldman Sachs analyst has downgraded Tiffany from neutral to sell. That analyst is Adrianne Shapira by name. She says, "TIF trades at a 26% premium to an index of department stores, which is approaching one standard deviation above the 3-year average premium of 15%. We believe as [earnings estimate] beats moderate in the near term, peak valuations will be tough to sustain."

There is not especially good reason for me to be discussing Tiffany's right now, but it does give me a chance to quote the famous dialog from a certain classic Audrey Hepburn movie:

Holly: Poor old Cat. Poor slob. Poor slob without a name. The way I look at it, I don’t have the right to give him one. We don’t belong to each other; we just took up by the river one day. I don’t even want to own anything until I can find a place where me and things go together. I’m not sure where that is, but I know what it’s like. It’s like Tiffany’s

Fred: Tiffany’s? You mean the jewelry store?

Holly: That’s right. I’m crazy about Tiffany’s…Calms me down right away. The quietness and the proud look of it. Nothing very bad could ever happen to you at Tiffany’s. If I could find a real-life place that made me feel like Tiffany’s then…then I’d buy some furniture and give the cat a name.

Here's hoping that Tiffany's itself finds that place.

Ackman and Target

William Ackman, the principal of Pershing Square, is hosting what he calls a "town meeting" today, to introduce his nominees for the board of big-box retailer Target.

Isn't that a wonderful name for such an anouncement? Reminds me of a Norman Rockwell painting. In fact, I think I'll post a photo of the relevant painting here. I gather that is supposed to be some ordinary townfolk telling his neighbors what he thinks about putting a stoplight in at State & Main.

Anyway, Ackman's nominees are as follows: himself, Michael Ashner, James Donald, Ronald Gilson, and Richard Vague. If they are successful, they will replace the following incumbents: Mary Dillon, Richard N. Kovacecich, George W. Tamke, and Solomon D. Trujillo.

Why is a slate with five names contesting a slate with four names? Apparently there is a dispute over the size of the board. Ackman believes the board ought to have 13 seats rather than 12, and that 5 of those 13 ought to be up for decision at the forthcoming annial meeting. The company holds ithas a 12 member classified board, with just the four seats at issue this year.

Target Corporation's retail segment includes general merchandise and food discount stores and Target.com, a fully integrated on-line business. In addition, the company operates a credit card segment that offers both store-brand credit cards and VISAs. The company, which operates 1,699 stores in 49 states (which state is excluded? -- I can't tell you) has sufered a severe stock price decline of late, which has ticked off Mr. Ackman, who seems to have bought in at the peak.

The Financial Times quotes Ackman thus: "This is not a poorly managed company. this is really just about improving the board."

It seems sensible to presume that dysfunctions at the board will also show up in the management. If they don't, how dysfunctional can they be? This one confuses me a bit.

I appreciate the excuse to steal the Rockwell image, though.