Pershing Square holds 8.8pct stake in Longs-filing
NEW YORK, Aug 5 (Reuters) - Activist hedge fund Pershing Square Capital Management on Tuesday said it has built up an 8.8 percent stake in Longs Drug Stores Corp LDG.N and may engage the company in discussions, according to a regulatory filing.
The New York-based hedge fund also said that in addition to buying 3.13 million shares in Longs, it has purchased "total return swaps" to bring its "economic" exposure to about 15.4 percent of Longs.
Swaps are instruments that allow the holder to benefit if the underlying stock price rises but don't give the holder voting rights.
Pershing Square, which has taken activist roles in a number of stocks including MBIA (MBI.N), Fannie Mae (FNM.N), McDonald's Corp MCD.N and Wendy's International (WEN.N), also said it has engaged unnamed "advisors" for its Longs investment and may hire additional advisors. It said it spent $136.6 million on the investment.
Longs Drugs shares rose $2.30, or 4.6 percent, to $52.33 in midday trading on the New York Stock Exchange.
Pershing Square, which is managed by investor Bill Ackman, regularly takes stakes in retail store chains. It held stakes in Barnes & Noble Inc (BKS.N), Borders Group Inc (BGP.N), Sears Holdings Corp (SHLD.O), Target Corp (TGT.N) and others, according to its latest 13F regulatory filing for the first quarter. It had no Longs holdings at that time. (Reporting by Dane Hamilton, editing by Mark Porter) (Reuters email: dane.hamilton@thomsonreuters.com. 646 223 6161)
