Shares of FedEx rose over 7% last Tuesday on market speculation that the air shipping company could be a target for activist investor Bill Ackman’s Pershing Square. On Monday Ackman sent a letter to clients asking them to commit $1 billion to a new fund to invest in an unnamed US company. Conjecture focused on FedEx as the best fit based on the details Ackman gave in his letter, and investors piled in on the chance that the company was on his shopping list. Shares rose the most in 9 months, trading on volume six times higher than average.
Needless to say, jumping on the rumor was premature, and shares gave back some of the gains by the end of the week.
And it’s worth mentioning that the last time Ackman created a fund for a single-stock, it turned into a wreck: his $2 billion investment in Target Corp. in 2007 lost 90% of its value over two years.
To be fair, FedEx is up better than 13% this year, and indicators signal a buy on the stock…just not a buy on a rumor-driven thrill ride.
Rezny Wealth Management may hold investments in above-mentioned securities; positions can change at any time.