Bill Ackman Buys More Family Dollar (FDO) & Fortune Brands (FO) ~ market folly

Friday, June 10, 2011

Bill Ackman Buys More Family Dollar (FDO) & Fortune Brands (FO)

Bill Ackman's hedge fund Pershing Square Capital Management has been on a buying spree this week.

Fortune Brands (FO)

First, they scooped up shares of Fortune Brands (FO) on June 6th and 7th (and last week as well). In total, Pershing purchased 501,397 shares of FO at prices of $62.87 and $63 per share.

After said purchases, the hedge fund now owns 17,170,033 shares of Fortune Brands. This is an activist position for Ackman and we covered his initial 13D filing last year.

The thesis here centers on breaking up the company's collection of brands. Wheels are already in motion in this regard as FO seeks to become a pure-play on the spirits business and will spin off its other divisions.

Family Dollar (FDO)

Second, Ackman was also out buying even more Family Dollar (FDO). As we covered recently, Pershing initially bought FDO in the first quarter but as of June 9th now has a 8.9% ownership stake in FDO with 10,871,793 shares, almost doubling his position in recent weeks.

At the recent Ira Sohn Conference, Ackman laid out his FDO thesis and it is largely based on FDO being an attractive leveraged buyout candidate. As we've already detailed, Family Dollar actually received a bid to go private from its second largest shareholder, Nelson Peltz's Trian Fund. While they essentially offered between $55 and $60, shares currently trade around $52.75.

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