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Wall Street whale Bill Ackman is known to patiently stalk his prey for years. Yes, beneath his smooth exterior and soft-spoken demeanor lies the heart of a killer. Should you trade in his wake?
Background
Ackman’s most recent prey has been the bond insurers. When these backstops of the financial system were cracking, Ackman was profiting. He began stalking the high flying group five years ago.
“In August of 2002 I met the CEO of the Ambac [ABK
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] . And right around that time I started shorting the stock,” he told CNBC.
His preferred method of kill is methodical research Before shorting MBIA [MBI
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], he is said to have read 140,000 documents on the company.
Investors in his fund reaped a market-busting 22% return in 2007 while Ambac and MBIA were pushed to the brink of collapse.
Now this whale is circling the American consumer because he sees something he likes. Ackman is long beleaguered retailer Target.
Should you try to swim in this whale's wake?
Trades
As of March 31st the following were Ackman’s top holdings; Target (TGT), Sears (SHLD), Barnes & Noble (BKS), Wendy’s (WEN) and Borders (BGP).
I think the key to his strategy is on the short side, says Karen Finerman. We know that he’s short Fannie and short Fannie preferred. But on the long side, of all his holdings I’d only follow him into Target, she says.
Me too, adds Guy Adami.
I’d go into Borders instead, counters Jeff Macke. He's more able to control the outcome there.
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Trader disclosure: On July 30, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (AAPL), (TSO); Najarian Owns (CSCO) Calls, (EMC) Calls, (XLY) Calls, (SU) Calls; Macke Owns (WMT), (MSFT), (COST), (ATVID), (DIS), (EMC); Adami Owns (C), (GS), (INTC), (NUE), (AGU), (MSFT), (BTU); Finerman Owns (GS); Finerman's Firm And Finerman Own (C) Leaps; Finerman's Firm Owns (FLS), (MO), (NOK), (PM), (RAI), (SUN), (TSO), (VLO), (RIG), (MCC); Finerman's Firm Is Short (SPG), (KIM), (XLF), (BBT), (IYR), (IWM), (MDY), (SPY), (IJR)
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