Portfolio.com: Culture and Lifestyle

The Future of Reproduction: The Birth Business

Mon, 27 Apr 2009 04:00:00 GMT

The future of the birth business may in fact lie in the past: a low-tech birth that focuses on the needs of the mother and the natural physiological process. At The New Space, a birth center slated to open in Manhattan in 2012, laboring mothers will give birth in rooms with amenities like Jacuzzi tubs and queen-sized beds.

It sounds like an expensive luxury, but there is a growing realization that it could not only improve the health of mothers and newborns, but also save the U.S. health-care system millions of dollars. A series of systematic and scientific reports and reviews, funded by the Milbank Foundation, has just been released. It proves, statistically, what alternative practitioners have been saying for years: that the birth-industrial complex has gotten out of hand.

In the past, financial incentives have steadily worked to push the birth process into operating rooms and surgical centers. Currently, only 1 percent of births in the U.S. occur with midwives at home or at birth centers, and childbirth is the leading reason for hospitalization.

It all adds up to a huge proportion of the ballooning national health-care budget: Six of the 15 most frequent hospital procedures billed to private insurers and Medicaid are birth-related, bringing the nation's maternity bill to nearly $86 billion in 2006, according to the 2008 Milbank Report.

Because insurance companies pay hospitals by the procedure, and because malpractice insurance is so high, most hospitals don't employ midwives and instead lean on high-tech procedures in order to bill more and prevent less risk.

The typical scenario: Hospitals want to get women in and out quickly, so doctors often induce labor with drugs, which causes contractions to happen so quickly that they become unbearable and require an anesthesiologist to come in with an epidural, or the surgeon to move straight to a C-section, explains Jennifer Block, the author of Pushed: The Painful Truth About Childbirth and Modern Maternity Care.

"We've pushed every woman in the hospital and almost every delivery is by a surgeon," she says. According to the Milbank numbers, she's not exaggerating. In 1965, the national C-section rate was 4.5 percent, and in 2008, an estimated one in three of the 4.3 million births that year was by C-section. The average hospital birth now costs between $7,000 for a vaginal birth and $16,000 for a C-section.

The Milbank report's most significant finding, however, is hard scientific evidence that high-tech does not necessarily translate into the highest-quality care and the best outcome. For example, the report shows that fetal monitoring, the most commonly used billable procedure, has no clear benefit for a low-risk pregnancy because it keeps the mother confined to bed, which is not always the best labor position.

And while C-sections can be a life-saving procedure, they are also overused and can lead to health problems in the newborn. So birth facility that doesn't speed up the process or rely too heavily on surgery actually helps laboring mothers experience less pain and lowers the chances for complications, says Maureen Corry, the executive director of The Childbirth Connection and one of the report's authors.

By proving that natural childbirth is safer than medicalized delivery, the Milbrook report gives cover to hospital administrators who would change the system because it improves their bottom line. Rebecca Benghiat, the executive director of The New Space, compares the new birth-center model with other specialized medical centers: cardiac-care centers, for example.

"From a business perspective, [specialization] lowers the overhead and lets us break even based on a facility fee instead of both a facility fee and a provider's fee," she explains. In other words, the patient pays for the space instead of the procedure.

"From the patient's perspective, it will be all about what she and her family needs," Benghiat continues. But it also gives the provider what it wants: more room for profit. Doctors and midwives do pre-natal care offsite, lowering the actual cost of a birth by about $1,600. Additionally, the center does not have to pay as much for the malpractice insurance.

Will the new birth-center model catch on? Dr. Lisa Latts, vice president of The Program for Clinical Excellence at WellPoint, which owns 14 Blue Cross Blue Shield plans, says that so far "there is just not a lot of demand for the more leading-edge models."

The problem, she explains, is that moms don't know about them. And the ones that do may be put off by the pain involved in natural childbirth. The solution, she suggests, could be as easy as creating natural-birth centers with higher-tech backup—just in case.

Latts sees the birth-center model as the rare win-win situation: When women have more choices, she says, the rates for C-sections and other expensive procedures decrease, resulting in a potential saving of billions of dollars.Related Links
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The Future of Reproduction: Male Pregnancy

Mon, 27 Apr 2009 04:00:00 GMT

Two men sit in the waiting room of a fertility clinic, holding hands. One of them is six months pregnant. In his distended uterus beats the heart of a healthy boy. But the nervous parents don't know that yet. They've come in for an ultrasound and some genetic tests that will reveal whether their son is developing normally. Since he has two dads, the child has an abnormally high risk of genetic defects.

Male pregnancy? It sounds like the setup for Junior, the 1994 comedy starting Arnold Schwarzenegger as a scientist who impregnates himself. When it was in theaters, it seemed like science fiction. Now, the technology to create a child with DNA from two dads is just around the corner: Already, Shinya Yamanaka, one of the world's leading regenerative-medicine scientists, has sketched out how stem-cell technology could allow two men to have a baby. A skilled biologist could take a skin cell from one of the dads, reprogram it with a virus, and then turn it into an egg. The other dad would then supply sperm via the usual process. Put egg and sperm in a test tube, and voila—your embryo has two daddies.

The next step is keeping the embryo healthy. According to Rudolf Jaenisch, the co-founder of the pioneering stem-cell company Fate Therapeutics, a child made with the DNA from two males will not develop properly. He explains that with normal eggs and sperm, some genes are switched off through a natural process called imprinting. Men imprint their sperm, and women imprint their eggs—but differently. Even if scientists can coax an egg out of a man, it would be imprinted as if it were a sperm, giving any resulting embryo a deadly double dose of some genes that control growth. Jaenisch says, "With our present knowledge, there is no strategy to overcome this problem."

However, people are actively trying to solve the imprinting problem in order to help infertile heterosexual couples who want to have children that are biologically their own. Yet the technique itself does not discriminate between heterosexual and homosexual. "Making usable gametes [sperm and eggs] from these sources is still some way off, but it looks increasingly likely that this will one day be possible," says Richard Anderson, a fertility expert at the University of Edinburgh. But, he explains, "It still needs a uterus to turn into a baby."

A lesbian couple has a uterus to spare, and already, a precedent. Consider Kaguya, the first mammal made by two mommies (and a whole lab of researchers in Japan.) The mouse was created with eggs from her two mothers at the Tokyo University of Agriculture in 2004. As it turns out, male-male reproduction is much harder, but researchers are optimistic.

For a gay male couple, the simplest source of a uterus would be a surrogate mother. Implantation after in vitro fertilization and surrogacy are well-established medical practices, but what if our hypothetical gay dad wanted to actually be pregnant in order to carry his own baby to term—a la Schwarzenegger in Junior? Well, scientists are nibbling away at that problem too.

"This would require very significant advances in tissue engineering, relevant surgery, immunology (to prevent rejection), and understanding of human development in utero from implantation through to the control of the onset of labor," writes Richard Anderson, a fertility expert at the University of Edinburgh. Conceptually, there are two ways to get a male uterus: You could build one from scratch, or import one from a willing womb donor. No one is currently working on tissue-engineering a womb, but regenerative-medicine researchers feel confident that we will have one sooner than later.

Anthony Atala, a researcher at Wake Forest University, has already grown several bladders in his lab and implanted them in children who were born with urinary defects. Structurally speaking, a womb and a bladder are quite similar organs. A womb transplant, on the other hand, has already been tried—once. It wasn't successful, but Edwin Ramirez, a reproductive surgeon in California, is actively developing a procedure to transplant a healthy uterus from one woman to another. He thinks that it would be possible to give men a uterus transplant too.

Ramirez, Jaenisch, and Anderson—indeed, all of the experts we spoke to—were unanimous: They would never allow these experiments to happen on their watch. All of them have serious ethical concerns. But they can't hold the technology back. "I would not be surprised if an enterprising and reckless person or group of persons would attempt such an endeavor if not only to prove it can be done but also to garner headlines," says Gary Piquette, the technical director of an in vitro fertilization clinic.

When that happens, a scientific question will be answered, and a battle for same-sex reproduction rights will begin.Related Links
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Sparing Women From Fertility Drugs

Mon, 27 Apr 2009 04:00:00 GMT

In October 2007, a British woman whose eggs were matured in a lab rather than her body gave birth to healthy twins, marking the U.K. debut of a procedure that could spare women using assisted reproduction from potentially dangerous fertility drugs.

During in vitro fertilization—IVF, the standard assisted-reproduction technique—women take drugs to stimulate egg production and maturation. The eggs are then harvested, fertilized, and implanted. The drugs, however, sometimes cause a condition called ovarian hyperstimulation syndrome, which in rare cases can be life-threatening.

During in vitro maturation, or IVM, immature eggs are removed and nurtured in a lab before being fertilized and implanted. Only one dose of fertility drugs is required.

The technique is still immature: The BBC reports that, of 2 million children born worldwide through IVF, around 400 were produced through IVM; success rates of lab-matured eggs are currently lower than those used in IVF. But for women who are especially sensitive to fertility drugs, or want to freeze eggs for future use, IVM may be a good option.

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Return of the Doc Who Cried Clone

Mon, 27 Apr 2009 04:00:00 GMT

Five years after Panayiotis Zavos shocked the world by claiming to implant a cloned human embryo, the rogue fertility doctor says he's done it again—and this time, with no fewer than 11 clones.

It's hard to know what to make of Zavos' boasts, which emerged yesterday in the wake of a Discovery Channel press release promoting its upcoming documentary, Human Cloning.

Zavos' original claims were roundly dismissed after he failed to produce any proof. The same went for a 2006 announcement that he'd put cloned embryos in five British women.

This time, he was filmed conducting research on allegedly clonal embryos before implanting them.

"My babies are doing well," he says on camera while peering through a microscope at a secret laboratory somewhere in the Middle East, where he moved so as to conduct research illegal in most of the world.

"I think we have three very good embryos that could be in utero today. If the implantation is successful as well, and the pregnancy is maintained, then as we say in the U.S., we have a home run," he said.

As evidence, the film is meaningless. Maybe he did implant the first reproductively cloned embryo. Maybe he's found a way to consistently avoid the potentially fatal genetic errors introduced during the cloning process. There's no way of knowing.

History, of course, suggests an answer. And if Zavos' assorted claims haven't stood the test of time, an assessment of him by bioethicist Art Caplan has.

"I think he is the most dangerous of the current fringe proponents of cloning, because he knows more, stretches the facts, and seems to be wallowing in a mix of publicity and fundraising that rests on a foundation of hype," Caplan told the Los Angeles Times in 2001.

Nothing has changed.

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More Sex Makes Better Sperm

Mon, 27 Apr 2009 04:00:00 GMT

Couples who hope to boost their chances of conceiving by abstaining from sex for days or even weeks, pay attention: You might not be helping. Australian researchers have found that, at least for 42 fertility-challenged males in their study, frequent sex appears to improve sperm quality.

How come? Because between episodes, stored sperm is damaged by free radicals. (Damn you, free radicals! First my mitochondria, then my brain, and now this!) If the system doesn't get cleaned out every now and then, then woozy, flaccid-tailed swimmers end up getting in the way of their healthier counterparts.

The—sorry, I can't resist this one—nut quote from a fertility doctor in the Times Online: "If you are a guy who has high DNA damage and a decent sperm count, it is probably in your interest to ejaculate every day."

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How Gadgets Lose Their Magic

Mon, 27 Apr 2009 04:00:00 GMT

When Arthur C. Clarke went to the great geosynchronous orbit in the sky last year, he left behind a huge legacy, not least of which was a quote oft cited by Silicon Valley visionaries and wannabes. "Any sufficiently advanced technology," the sci-fi master wrote in 1962, "is indistinguishable from magic."

I thought of Clarke's observation recently while I was playing with a Flip MinoHD camcorder. It's a stripped-down device with a footprint smaller than an Altoids tin, yet it holds an hour of video (in high definition!) and even has 2X zoom. It sports a clear 1.5-inch screen for shooting and playback. Its controls are so simple that even an adult can master them on the fly. It has a pop-out USB plug for uploading to a computer and recharging without fumbling for a cable. Its price tag is $230, less than the cost of a really good seat at a Van Morrison concert.

When I was growing up, television production was confined to studios, and video cameras were giant cyclopsian beasts that included chairs for their operators. Only TV stations and networks could capture a video image, and "getting on television" was an event that required alerting all your friends and the entire family tree. When the age of consumer video arrived, it was like a miracle—even though the earliest camcorders had to be propped up on a shoulder and could record just a few minutes of video. Of course, the black-and-white machines cost a bundle—enough to buy tickets for an auditorium of Van Morrison fans back then.

Sir Arthur would undoubtedly agree that the transformation from TV studio to Flip is the very definition of magic. This applies to all the similar fruits of Moore's law. In the past 40 or 50 years, such mind-stretching advancements have become the norm.

But what happens when magic is an everyday occurrence? Consider that the Flip MinoHD—a once nearly unobtainable piece of technology—is now a 3-ounce knickknack. Better yet, it's rendered so elegantly that its coolness is baked in, not slapped on. Barely a minute after opening my review unit, I had the gizmo fired up and ready. My first experiment was to grab a long tracking shot through the rows of Wired's cubicles. I downloaded the footage and was impressed that all was captured as planned. However, the handheld image was a bit shaky…maybe too vérité. As a result, my first thought was not so much "What hath God wrought?" as "What? No image stabilization? Where's the built-in steadicam?"

We all, I think, have become inured to Moore's law. The astonishing advances that once would have brought us to our knees are now reduced to a thumbs-up on Gizmodo. They're removed from the realm of magic—they're just cool gear.

Which brings me back to Sir Arthur. His quote makes me think of the European explorers who encountered previously unknown tribes. I used to imagine what it would be like to venture deep into the bush and unveil my latest gadget—a digital tape recorder, an iPod, an electric toothbrush.

But now my daydreams are different. As technological magic becomes routine, I wonder whether a visit to a preindustrial society might teach me more than it teaches them. The only thing more fascinating than our technology is the idea of getting along without it. Maybe the way to recapture the magic is to turn all that stuff off.

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Designer Babies: A Right to Choose?

Mon, 27 Apr 2009 04:00:00 GMT

When a Los Angeles fertility clinic offered last month to let parents choose their kids' hair and eye color, public outrage followed. On March 2, the clinic shut the program down— and that, says transhumanist author James Hughes, is a shame.

According to Hughes, using reproductive technologies—in this case, pre-implantation genetic diagnosis (PGD), in which doctors screen embryos before implanting them—for cosmetic purposes is just an old-fashioned parental impulse, translated into 21st-century technology.

If nobody gets hurt and everybody has access, says Hughes, then genetic modification is perfectly fine, and restricting it is an assault on reproductive freedom. "It's in the same category as abortion. If you think women have the right to control their own bodies, then they should be able to make this choice," he said. "There should be no law restricting the kind of kids people have, unless there's gross evidence that they're going to harm that kid, or harm society."

Hughes' views are hardly universal. "I'm totally against this," said William Kearns, the medical geneticist who developed the techniques used by the Fertility Institutes for cosmetic purposes, in a newspaper interview. In the same article, Mark Hughes, one of the inventors of pre-implantation genetic diagnosis, called its non-therapeutic use "ridiculous and irresponsible."

Wired.com talked to James Hughes and to Marcy Darnovsky, associate executive director of the Center for Genetics and Society, about genetic selection.

Wired.com: What do you think about using reproductive technologies to pick cosmetic traits?

James Hughes: It's inevitable, in the broad context of freedom and choice. And the term "designer babies" is an insult to parents, because it basically says parents don't have their kids' best interests at heart.

The only people who are consistent about this are the Catholics. They say that you have to accept whatever pops out of your procreative unions. But if you think that people have a right to choose how many children they have, or the partners they have them with—"I love you, but you're just too short, or too ugly"—that's a procreative choice.

If I've got a dozen embryos I could implant, and the ones I want to implant are the green-eyed ones, or the blond-haired ones, that's an extension of choices we think are perfectly acceptable—and restricting them a violation of our procreative autonomy.

I want to see a society in which parents can say, I want my kids to have the best possible options in life. That might include getting rid of obesity genes. Every child should be a loved child, but there is no virtue in accident.

Wired.com: But one could argue that obesity is a health problem, not a cosmetic issue.

Hughes: So parents are only allowed to have preferences about health conditions? What if we discovered that eating fish oil while pregnant increases intelligence, which it does? We're not going to say that you can't make certain dietary choices. In fact, we encourage them.

And would we say it was morally inappropriate for parents to stand on their head during copulation, if it made their children blond? I doubt it. The only reason this is different is because it involves embryo selection.

Wired.com: But isn't this going to produce a super-race of children born to people wealthy enough to afford artificial reproduction?

Hughes: Insofar as the choices are eye color and hair color, that's not going to exacerbate inequalities in society. It's a minor way in which greater wealth allows more reproductive choice, but it shouldn't be a reason to override reproductive freedom.

If PGD had the ability to double the IQs of children—which it doesn't—then that would be the sort of inequality that warranted a social policy against it. I'm worried about that situation, not hair and eye color.

Gross exacerbation of social inequality is a grave social harm. That's why we need universal health care, and universal access to any technology, which provides profound enablement.

Wired.com: It's hard to imagine these ever being universally available.

Hughes: Medicaid has considered the provision of fertility services. Some say fertility isn't a health issue—but I think that's B.S. Having a saline breast implant put in after a mastectomy isn't a health issue, but we pay for it, because it improves quality of life.

Wired.com: Some ethicists say that non-therapeutic reproductive technologies shouldn't be used until the industry is better-regulated.

Hughes: Fertility clinics and reproductive medicine need a complete revamping of their regulatory structures. Many of the procedures are not being monitored for safety and efficacy. But those are the only two grounds on which to base a legitimate societal regulation.

Wired.com: Where do you draw the line? What if I want disabled children?

Hughes: We've been debating that for five or six years, ever since a deaf lesbian couple in Chicago wanted to use PGD to choose among the embryos they'd fertilized for one that inherited a form of deafness. They said that deafness is a perfectly benign condition, and that living in the hearing world is like living in the white world as a black person.

I argue in Citizen Cyborg that I wouldn't want to see a law saying you can't do this, but I'd want to see strong moral sanctions.

The reproductive autonomy of parents should be protected at a high level—and that even includes decisions that impose a degree of harm on children.

Wired.com: But what if I wanted to have a child who was deformed?

Hughes: I think a principle developed by Peter Singer is useful: If you think parents should be punished for taking that ability away from a child who's already born, that's probably harm.

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The Prada Transformer

Fri, 24 Apr 2009 04:00:00 GMT

Exhibiting its flair for the dramatic while pushing the boundaries between architecture and fashion, Prada unveiled its tetrahedron-shaped Transformer on Wednesday on the grounds of an ancient Korean palace in central Seoul. Prada is spending $10 million on the much-hyped project, a collaborative venture with Rem Koolhaas’ firm, Office for Metropolitan Architecture.

Miuccia Prada and Koolhaas hosted a cocktail party Thursday night to fete the 160-ton steel structure, which can be lifted and rotated in an hour to create a different shape and interior. (For a WWD slideshow from the party, click here.) The Transformer is currently in the form of a hexagon to stage a reprise of the exhibition “Waist Down—Skirts by Miuccia Prada.” It will go on to host an art exhibition, film festival and fashion show, morphing its appearance along the way.

“It is a building which is very much alive,” said the project’s chief architect, Alexander Reichert, who works out of the Rotterdam office of Koolhaas’ firm.

Reichert spent weeks—wrapped up against the cold in a temporary office next to the site—ironing out design flaws along with the project’s contractor, South Korea’s Eunmin Space & Design. Initially, Reichert thought the building could be flipped or rolled from one side to another, but that would bring the Transformer perilously close to the 16th-century Gyeonghui Palace. So, Reichert decided on a structure that could be rotated by using cranes to lift it.

Each side of the Transformer has three openings, which connect with a series of air-conditioning vents when the structure is rotated. “It’s like a plug that always lands on the same points,’’ Reichert said.

The Transformer is wrapped in a highly elastic polyvinyl chloride membrane that was sprayed on as a liquid. Developed by Cocoon Holland BV, this layer flows over the Transformer’s curves and ripples in the wind, resembling a sail or a tent.

When the “Waist Down” exhibition ends on May 24, the structure will be picked up and rotated to create a rectangle that will show movies from June 26 to July 12 selected by the Mexican film director Alejandro González Iñárritu. Art will then be shown when the structure is rotated again to create a floor plan in the form of a cross. Finally, the Transformer will be picked up once again and rotated to form a circle for a fashion show. All shows are open to the public and free of charge.

Steel plates support the structure, which sits on concrete plates above the palace grounds. Seoul City Council wanted the structure above the ground to avoid damage to the palace grounds. Being a fashion house, Prada, along with Reichert, even made the wooden walkway and temporary buildings around the Transformer—built from old shipping containers—look sleek. The containers were painted green and gray, a color associated with the shades of the palace and of Prada. Inside the Transformer, about 100 skirts are displayed.

WWD published two slideshows of images of the Prada Transformer. Click here to see photographs of the structure during the day, as well as to get a peak inside. And click here to see what the Transformer looks like at night, during its launch party.

Spring Cleanup

Thu, 23 Apr 2009 04:00:00 GMT

With retailers still suffering from excessive inventories, the spring cleaning has begun.

Coming off the nightmare of fall's early and aggressive markdowns, the first spring price cuts are already budding, particularly in the luxury tier and women's categories where the cadence of deliveries is quicker than menswear. Last week alone, Bergdorf Goodman advertised up to 40 percent off on its contemporary floor, and Yves Saint Laurent sent an email invitation to customers to receive an "exclusive one-time discount" at any boutique in the U.S. and 50 percent off ready-to-wear and 30 percent off accessories Wednesday.

Sample sales are on the rise, too, with stores pushing back goods to vendors. And some retailers are utilizing sales tactics usually reserved for holidays and pre-Christmas. Last week, for example, J.C. Penney Co. Inc. ran two days of doorbusters including dresses, Arizona, and other private-label products, and a buy-one-get-one-for-88 cents deal on a host of items. Neiman Marcus Inc. has offered various incentives this season to members of its InCircle reward program, such as free lunch at restaurants in the store and $50 gift cards. The website has also been promoting free shipping through today. Macy's Inc. ran a three-day fine jewelry sale with 30 to 50 percent off much of the assortment.

So-called "private" friends and family sales have taken a high profile. Saks Fifth Avenue staged one last week, and promoted it on the homepage of its website.

Nordstrom followed with a friends and family sale of its own, and this week, it's Bloomingdales' turn, offering 20 percent off almost all regular- and sale-priced purchases in apparel and home.

"People are going deeper, earlier," said Brendan Hoffman, president and chief executive officer of Lord & Taylor, characterizing the state of markdowns this season so far.

The situation has fueled speculation over when the major spring clearances will break and who will be the first out of the gate. Typically, department stores roll out spring clearances around Memorial Day, while higher-priced specialty chains pull the trigger around mid-May to make space for June's pre-fall deliveries.

At Nordstrom, which clears a lot of merchandise through its extensive network of Rack outlets, a spokeswoman suggested the inventory situation was under control. "We continue to feel that we are appropriately managing our inventory and are getting ready for the women's half-yearly sale, which is in May," she said.

Analysts and retailers expect clearances to surface before Mother's Day, with stores currently grappling with spring orders written last year—before consumers really clamped down on spending—and trying to whittle inventories down in line with demand. "Historically, I would not have considered markdowns before the beginning of June," said Diane Levbarg, executive vice president of Missoni. "However, this year, while it's still too early, I may reevaluate my strategy based on market conditions."

Aside from the rising unemployment rate and uncertainties about the economy, the late Easter and the late arrival of springlike temperatures to most of the country have contributed to disappointing apparel sales this season. In addition, push backs to vendors have sparked many more sample sales.

However, retailers and analysts contacted Monday emphasized that discounting hasn't reached clearance proportions yet, and that when the clearances do break, they shouldn't be anywhere as epic as the fall's avalanche of price cuts.

"I don't think that it's anywhere close to the degree and depth of what was experienced in the fall," observed Arnold Aronson, marketing director of retail strategies for Kurt Salmon Associates. "There's more of a gradual realignment of inventories to sales levels."

Spring markdowns and clearance tactics will include more retailer-vendor discussions than in the past, Aronson suggested. "There won't be huge surprises, or unilateral kinds of decisions," he said. "At this point, it's primarily first markdowns happening earlier than normal. Stores are not into clearance mode yet."

Jeffrey Kalinsky, founder of Jeffrey designer stores in New York and Atlanta, said he hasn't taken "a single markdown" or run any promotions. Competitors have been taking markdowns since January, he said, adding, "A lot of people do promotions under the guise of 'friends and family.' No one has broken sale yet, to my knowledge."

"Normally, in a good year, you wouldn't even be having this conversation" about markdowns, said one specialty store retailer. "It's too early. It's much, much, much too early. Nobody wants to be the first [to break price] because they're terrified of what happened with Saks [last holiday]. There's such a backlash because of markdowns taken last November that people don't want to go on sale. Business is challenging and I'm waiting to see if it gets more challenging.

"Would I love to go on sale now?" asked the retailer. "Yes. Everybody has too much inventory. Nothing's selling right now."
Store executives differed on whether a "friends and family" event should be considered a sale. "I don't see friends and family as a markdown," said a luxury retailer. "Saks' friends and family offer is for 20 percent off. A sale is 40 percent off. To me, 20 percent is an hors d'oeuvre. It's maybe an incentive. Everybody's giving some type of incentive. They're all doing something out the back door."

"Nobody is experiencing great business," said an owner of a fashion boutique. "What am I going to do if a huge retailer like Saks or Barneys [New York] does a major markdown again? It's not easy out there. We're not set up to do anything like promotions."

Stanley Korshak hopes to stick to its same schedule as last year by marking down resort and some spring the first week of May, and the remainder in June.

"If Neiman's and Saks pull the plug and we are forced into reacting, then we'll do what we have to do, but we do not have inventory issues," said owner Crawford Brock. "We are barely missing our plan, which is about 30 percent down from last year. But we made money in the first quarter and in February and March, and we did it by cutting expenses—not by selling more."

All things being relative, the best businesses have been contemporary, young designer, bridal, men's shoes and belts, and private label goods, Brock said. Gowns, handbags, shoes, and denim are weak. "Shoes and bags are tough, and I think it's a price point issue," said Rose Clark, general merchandise manager. "Louboutin is still our No. 1 vendor, but it's expensive, as are Jimmy Choo and Valentino."

"The knee-jerk constant promotions that everyone had to deal with last fall were very detrimental, so we made a strong effort not to do that again this year," said Mickey Rosmarin, owner of Tootsies, which has stores in Houston, Dallas, and Atlanta. "We will mark down resort and some spring the last weekend in April."

Rosmarin said Bogner and Ralph Lauren have done well but, in general, sales trends have been inscrutable.

"Gowns are not selling, but prom dresses and other dresses are doing great," he said. "Some Italian sportswear is blowing out and some is dead as a doornail. It's almost no rhyme or reason."

Due to students on Easter vacations, traffic in malls has recently risen, according to Amy Wilcox Noblin, research analyst at Pali Capital. "This week kicks off new early summer product arrivals in stores and this is a transition period for some retailers in terms of promotions. But overall, retailers have either increased or sustained the heightened level of promotions to capitalize on the traffic," Noblin wrote in a report issued Monday. "Some store associates have theorized that traffic will drop post-spring break and we can detect a sense of nervousness about what the back third of April will bring."

Noblin observed American Eagle Outfitters Inc. is already displaying some early summer goods at full price and, therefore, experienced some slower traffic with fewer promotions. However, the store is running an all-shorts-under-$25 promotion, which is 30 to 40 percent off on average, and the new summer goods reflect "progress" in fashion, Noblin stated.

Tourists and teens off from school flocked to the Abercrombie & Fitch flagship on Fifth Avenue, though A&F branch stores did not show such traffic surges, Noblin wrote. Some early summer product has arrived, "but the majority still lacks enough fashion innovation necessary to entice customers to pay full price."

Pacific Sunwear, on the other hand, saw an uptick in traffic last week that's been sustained this week. "Significant promotions remain this week," touching up to 75 to 80 percent of the assortment, Noblin noted.

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The Optimist

Wed, 22 Apr 2009 12:00:00 GMT

Bill Ackman’s friends describe him in two ways. They offer the euphemism that the prominent hedge fund manager “does not suffer from low self-esteem.” Then they observe that he is optimistic—almost clinically so. A pop psychologist might diagnose Ackman with hypomania, a condition notable for persistently elevated moods but without the self-destructiveness of true mania. “He doesn’t register reversals and defeats and hard feelings the way other people do,” says David Klafter, a former colleague.

I ask Ackman about the condition while he is driving in a car with his family. He hasn’t heard of it, but says he is an “extremely resilient person.”

His 11-year-old daughter playfully chides from the backseat, “And you’re modest.”

Ackman is an activist investor, a respectable term for people who in the 1980s were known as corporate raiders. He buys big stakes in companies and then offers his opinions—loudly—on how to improve their operations. Often, Ackman has been a contrarian. He bought shares of Rockefeller Center when Manhattan real estate was on its back in the mid-1990s, and he launched an attack in 2002 on MBIA Inc., the powerful and politically connected bond insurer, when everyone else on Wall Street was convinced the company was gold-plated. In early 2007, he sounded one of the most prescient warnings about the credit bubble and the leveraged complex of American finance.

William A. Ackman, who turns 43 this month, has had the seminal financial career of the past two decades, which is to say that he’s had the seminal American career of the era. Almost immediately after business school, he started a hedge fund to manage millions for wealthy people—with no investing track record. About a decade later, he was forced to shut down. He endured regulatory investigations played out in the klieg lights of the press. He relaunched and clawed his way back to respectability, becoming a member of a new generation of Wall Street wise men. No hedge fund manager or investment banker will be able to replicate his trajectory for at least a generation.

Now he’s gearing up for one of the biggest battles of his professional life. After losing nearly $2 billion in a calamitous bet on the retailer Target Corp.—almost all that investors had given him for the investment—he is waging a proxy fight against the company. He will have a tough sell in the leadup to the annual shareholder meeting in May. Taking on a company as big as Target is almost unheard of. Target decries the contest as “costly and disruptive.”

Investors don’t want to hear much from hedge funds these days, and the tide may be turning against activism.

Panicked companies are focusing on their core business, not their capital structure.

At the same time, Ackman is talking about a much bigger turnaround situation: the United States. On a recent day in his glass-walled corner office in midtown Manhattan, he tells me with a smile, “I’m long America!” His tie is slightly loosened, and the sleeves on his blue shirt are rolled up. He is crafting a “plan to save the universe,” he says, with a slight glint that shows he is aware of the hyperbole. He recounts how he and Michael Porter, a Harvard Business School professor, recently had a “fantastic” meeting with Lawrence Summers, the director of President Barack Obama’s National Economic Council, to pitch their proposals for fixing the financial crisis and improving the market for mortgages.

“I’m long-term bullish on America but not on things turning around in the next few months, or even 12 months,” he says. “We’ve had the equivalent of a heart attack, but now we are in recovery, hopefully. It takes time to heal.”

These days, the public, enraged at the moneyed class of Wall Street operators, is in revolt over bonuses and rewards for failure, while Washington plans new regulations for hedge funds, and investors pull their money out of the industry. Ackman, who has been publicly vilified, can’t keep himself away from the spotlight. It’s almost in his nature to stand up and say that he has answers.

Overconfidence from financial types is what caused this grave economic crisis in the first place, of course. It can be a worrisome quality. But if you are Bill Ackman, you’re betting that confidence, correctly administered, might just get us out of it too.

Though often perceived as arrogant, Ackman up close might be the most winning salesman on Wall Street. Partly it’s because he explains each burst of an idea with overwhelming detail, lucidly laid out. But it also has to do with his boyish face—a rounded-off nose and high, rosy cheeks topped incongruously with a signature shock of gray hair that he’s had since high school. Going prematurely gray builds character, Ackman says.

“He’s gained a huge following of admirers, both male and female,” says Laurel Touby, founder of the internet company MediaBistro.com, which Ackman helped bankroll. “People fall in love with him. It’s almost like he’s the Bill Clinton of finance.”
Ackman thinks that the financial rescue of the banks, a plan which has been carried over from the Bush administration, is wrongheaded. And months before his meeting with Summers, that began to concern him. “I always thought the country would survive Washington. Now I feel like I have a civic duty if I have a decent idea for how to solve a financial problem,” he tells me.

A few weeks later, we speak again. “I’m so busy it’s driving me crazy,” he says. “Every day I don’t get this plan out, I feel the country is going to ruin.” In unguarded moments, he has a tendency to become grandiose. In public settings, he’s learned to restrain himself, speaking in interviews with a curious calm.

Ackman believes that the financial-system bailout has been flawed. The government has put taxpayer money into financial institutions at the wrong time and in the wrong place within their capital structures.

So far, we’ve aimlessly given billions to banks. That money could wind up going toward bonuses, dividends, or interest payments on debt, merely delaying the inevitable failure of the insolvent ones. Many economists argue for more aggressive nationalization of insolvent banks, but policymakers have been reluctant to take that route, wary of harming bondholders. Ackman wants these creditors turned into the equity holders of insolvent banks, through carefully adjudicated reorganization processes, before the government ponies up more money.

Ackman and Porter also worry that Treasury Secretary Tim Geithner’s rescue plan is overly focused on shoring up the securities and derivatives tied to mortgages. Instead, the duo would target the mortgages themselves in a way that they contend would be cheaper than the government’s approach. Ackman likens the situation to a $100,000 house with a million-dollar insurance policy. When the house burns down, rather than paying off the policy, the house should just be rebuilt. Ackman’s idea is to have the government offer to buy defaulting mortgages for 50 cents on the dollar. Such a guarantee would put a floor under the market and induce the owners, most of which are mortgage-servicing companies, to sell to the government if they can’t find better deals elsewhere. If values in the mortgage market stabilize, the result will be a beneficial cascade through the value of all those securities and derivatives. Leverage got us into this mess; Ackman wants to reverse it to get us out.

Even as the hedge fund business implodes from its own hubris, Ackman’s three main funds, which are separate from the Target fund, are doing okay, relatively speaking. They were down between 11 and 13 percent last year, much better than the average for hedge funds; he ended up with $4.4 billion under management. As of late March, his main funds were up about 3 percent, while the market had fallen double digits.

Ackman, the son of an affluent commercial-mortgage broker, spent his childhood in Chappaqua, New York. At Harvard Business School, he came off as bright, though sometimes a bit to the manner born. During a case study of Steinway & Sons, the pianomakers, he told the class that he had several pianos, seeming to assume that everyone else did too. (Ackman’s family owned two Steinways and a Yamaha, but they had inherited all three.)

He would say back then that his goal was to allocate as much of the world’s capital to himself as he could so that he could then reallocate it in the way that he thought was best. “He was a larger-than-life guy and came across that way, even in business school,” a former classmate recalls.

Soon after he graduated, he and a classmate, David Berkowitz, formed Gotham Partners, an investment firm. They shared an apartment to save money. One of the bedrooms was much larger than the other, and the two budding Masters of the Universe decided to have a closed-bid auction to figure out who would get the better room. Each wrote down the portion of the rent he was willing to shoulder to win the larger spot. Ackman remembers that he convinced Berkowitz that he badly wanted the big room when actually he was content with the smaller one. He contrived to drive up Berkowitz’s bid, making his part of the rent a fraction of his partner and roommate’s.

Ackman entertained the notion that he and Berkowitz might be able to raise tens of millions of dollars for Gotham’s launch—and he managed to talk his way into meeting with many of the wealthy and powerful moguls that he’d set his sights on. He pitched real estate scion Tom Durst and proposed three investment ideas to demonstrate Gotham’s research capacity. Durst declined to invest with the firm but then, according to Ackman, put his own money to work in the companies that Ackman and Berkowitz had recommended. After each had big gains in a matter of months, Durst came back to them and agreed to put money into their fund.
Gotham didn’t come up with anything close to Ackman’s hoped-for sum, mustering only $3.1 million. But in 1993, he and Berkowitz went ahead and launched the fund anyway. In time, Gotham gathered in millions. The Ziff family came in early; legendary investors such as Jack Nash, Leon Levy, Michael Steinhardt, and Seth Klarman also put money in.

In 1994, Gotham bought shares in a real estate investment trust poised to take control of Rockefeller Center, effectively becoming the largest holder of the real estate complex. At the time, the New York commercial real estate market was in a devastating slump. Thrusting himself into a highly publicized takeover battle, Ackman scored huge returns on his investment when the REIT was bought. He was on the map.

Over the next three years, his fund averaged returns of 40 percent annually after fees. Gotham hardly ever shorted or bet against companies. But one day in early 2002, Whitney Tilson, a friend of Ackman’s since their days at Harvard College, called him at home to recommend that he buy a stake in a company called Farmer Mac, the Fannie Mae of farm mortgages. Ackman printed the annual report and started reading it around 9 that night. Riveted, he continued past midnight. He called Tilson first thing the next morning, excited. Farmer Mac was indeed an opportunity, but Tilson had it wrong. Ackman didn’t want to buy the stock; he wanted to short it.

Gotham placed its bearish bets. Then Ackman confronted a problem—how to get his negative message out. He began by talking to a reporter at the New York Times but didn’t think the resulting story made the case strongly enough, so he set up a website for the express purpose of displaying a report he wrote, with disclosures that his fund was short Farmer Mac’s stock. Going public on a short is an invitation to be attacked by companies and investors.

Ackman relished the frenzy that ensued. He’s still proud of the report’s title, “Buying the Farm.” And he profited spectacularly from the results: By fall, Farmer Mac’s stock had collapsed.

Fresh from the Farmer Mac success, Ackman launched an audacious assault on MBIA, a company at the center of both Wall Street and state and local finance across the country. This move would prove remarkably insightful once the financial crisis hit, but vindication would be years in coming. First, Ackman was forced to undergo a remarkable battle with the company and its regulators.

MBIA dominated a sleepy, safe, and wonderful business: insuring municipal bonds from default. Since muni bonds almost never defaulted, MBIA almost never had to pay off the insurance. But when Ackman surveyed the company’s filings, he realized that MBIA had, to a degree utterly unrecognized by Wall Street, shifted into the business of insuring a vast array of much more dangerous paper: collateralized-debt obligations, or CDOs, which were constructed by the big banks to combine the bonds of multiple companies.

Expecting MBIA to default, Gotham began buying credit-default swaps, a form of short-selling in the unregulated derivatives market. If other investors became worried that MBIA would default, Ackman could sell the credit-default swaps for a gain; if MBIA actually did default, he would make a king’s ransom.

MBIA got wind of Ackman’s research and asked to meet with him. On November 21, 2002, Gotham representatives sat down with top MBIA executives. As people who were there recall the meeting, Jay Brown, the CEO of MBIA, began by saying how long he had been in the insurance business. “No one has ever questioned my reputation or my company’s,” he said. “You are using an unregulated market to manipulate a regulated market,” referring to MBIA’s insurance business. “You’re a young guy. It’s early in your career. You want to think very hard before you release that report,” Brown said, pointing out that MBIA was the largest guarantor of municipal bonds in New York State and the country.

“Is there anything you disagree with or that’s factually inaccurate?” Ackman asked.

“This is not about the facts,” Brown replied. “Let’s put it this way: We have friends in high places.” (An MBIA spokesperson says that the purpose of the meeting was to learn Ackman’s intentions and to request an early copy of his report to be able to point out any inaccuracies.)

The tense encounter lasted less than a half-hour. As they walked out, Ackman’s analyst shook Brown’s hand. Ackman then held his hand out to the CEO. Brown looked at it, lifted his arm up, and said, “I don’t think so.”

The hedge fund young turks walked away feeling threatened, thinking that MBIA would sue them. Ackman, though, was also exhilarated. On December 9, 2002, Gotham put out a devastating 66-page summation of the company’s precarious financial position called “Is MBIA Triple A?”

Nothing much happened. The stock actually went up that day.
The months that followed probably mark the period during which Ackman’s optimism-to-reality ratio hit a peak. As the case against MBIA was building, Gotham was falling down. Ackman and Berkowitz’s performance had been lackluster for several years running. Gotham had made several investments in privately held companies, and like many hedge funds in 2008, it found itself stuck with these illiquid assets as some investors were asking for their money back. Ackman and Berkowitz decided they had to wind Gotham down.

Things got worse. In January 2003, the office of then New York State Attorney General Eliot Spitzer subpoenaed Ackman. The Securities and Exchange Commission began an informal inquiry a few weeks later. At first glance, Gotham’s MBIA report looked as if it might be a case of a hedge fund trying to generate a huge amount of negative attention for a stock and then profit from the fear—a “short and distort” campaign. Gotham was pilloried in the press.

A dual investigation is almost every hedge fund manager’s nightmare. Not Ackman’s. “Now I’m going to be able to sit across from Eliot Spitzer and explain to him my concerns!” he told his skeptical Gotham colleagues.

Between March and June, the attorney general’s investigators hauled him in for six grueling days of testimony. Aaron Marcu, Ackman’s lawyer, tried to rein him in and keep him from saying anything that might later be used against him. Once, he interrupted Ackman to tell him he had already answered a question.

“Leave me alone,” Ackman snapped. “I’m not finished yet.” With that, he rose, unbidden, to a large pad perched on an easel and started diagramming MBIA’s serpentine financial structure. He expected to flip the AG’s team against MBIA.

Remarkably, he succeeded.

After a nearly four-year-long investigation, MBIA agreed to settle civil securities-fraud cases with the SEC and the attorney general’s office, paying $75 million in fines and restating seven years of earnings. David Klafter, who was then working as Gotham’s general counsel, says, “How often does a complaint go to a regulator and it boomerangs and the complainant ends up getting sanctioned? Not often, right? It happened to Bill.”

By January 2004, Ackman was back in the investment business, launching his current hedge fund, Pershing Square Capital Management. Over the next few years, he honed his approach to shareholder activism, scoring big investment wins with Wendy’s and McDonald’s.

Throughout that time, though, MBIA’s stock held strong. Employees at Pershing Square “thought I had gone off the deep end. And there were investors who did not invest in Pershing Square because they thought I had just lost it on this MBIA thing,” Ackman says. As time went on, he couldn’t stop thinking about the company. “I have trouble saying ‘MBA’ without saying ‘MBIA,’ ” he tells me. Once he was walking down a street on Manhattan’s Upper West Side, and he saw a woman wearing a sweatshirt with MBIA on it. Was it some kind of division of the company that he didn’t know about, he wondered? He repeated the word on the sweatshirt out loud to himself: “Co-loo-M-B-I-A, Co-loo-M-B-I-A.” Suddenly, he realized he was looking at a woman dressed in Columbia University garb.

In his office one recent late afternoon, he beckoned me over to his computer, with a look of pride. He launched a video of two young girls performing a catchy, singsongy tune. A few years ago, his two daughters had composed this song-and-dance routine as a present for their father:

MBIA is a bad company
They make people promises
they don’t keep
MBIA is a bad company
MBIA is a bad company
They lie to people and the
government and do bad things
MBIA is a bad company
MBIA is a bad company
Yes it is. Yes it is. Yes it is.

Ackman’s MBIA investment led him to a conclusion that proved pivotal in light of the coming credit crisis. In the spring of 2007, when the Dow was over 13,000 and the world was awash in money, he began giving a speech to investors called “Who’s Holding the Bag?”

The talk began with a warning that a virtuous credit cycle works viciously in reverse. It discussed the risks in mortgage-backed collateralized-debt obligations, corporate lending, and commercial real estate markets. He raised alarms about the credit-rating agencies’ conflicts of interest in the structured-finance market. He concluded that since the most highly rated paper, the triple-A portion, was more vulnerable than anyone realized because of poor lending, bond insurers like MBIA were in deep trouble. And if they were in trouble, all the parties that thought they were insured would also be in trouble. “When the losses hit, these guarantees will have no value, and counterparties are left holding the bag,” he said.
Few investors bought it at the time, but that’s exactly what happened over the next two years. It became clear that bond insurers wouldn’t be able to make good on their insurance, so banks—the bond insurers’ customers—were forced to take hundreds of billions of dollars in losses. MBIA reported $1.9 billion in losses in 2007 and an additional $2.7 billion in 2008. When Ackman started giving his talk, MBIA’s stock was in the upper $60s per share, close to an all-time high. By early March, MBIA was trading at approximately $3 a share. “The original thesis [about the company] was very much incorrect,” says Kevin Brown, MBIA’s spokesman. “I’m not going to deny his call on the mortgage market was correct.”

Late last year, Ackman closed out his MBIA positions. Overall, after six years of battle, his MBIA investments returned about $1.1 billion in profit. He has pledged all his personal proceeds to charity. He’s already donated about $50 million to his Pershing Square Foundation and to education causes and still owes about $100 million to make good on his promise.

Perhaps more surprising, Ackman managed to turn Spitzer into one of his defenders. While Spitzer was governor of New York, they met to discuss mortgage insurers, including MBIA. Today, Spitzer says of short-sellers, “In terms of contribution to the marketplace, they are critically important and unpopular because of it. We know there’s bias in favor of affirmative analytical work.” The former governor also tells me, “Bill is extremely smart,” adding that “he is obviously a guy who understands finance.”

When I ask Ackman how he feels now that this epic Wall Street battle is over, he pauses maybe for the first time that I’ve heard since we’ve met. He laughs uncomfortably. “I don’t feel like it’s over because MBIA still exists,” he says finally.

Despite his insight about the precariousness of the financial system, Ackman puzzlingly didn’t follow through to anticipate the pain of the American consumer. That led to a series of mistaken investments in retail. His Target investment has been the worst of all.

In 2007, he set up a special fund to invest in a single stock in a highly leveraged way. In a sign of how frothy the markets were, he raised $2 billion from start to finish in a week, about two-thirds of which came from other hedge funds. Investors knew the outlines of the investment but not that it would be in Target.

In his main funds, Ackman buys big positions in a few stocks. He maintains little leverage to reduce the risks inherent in this concentrated investing style. But he gets his risk jones on with single-stock funds. They are at once flying-too-close-to-the-sun ventures and deeply savvy moves. Even if the ideas flop, he is still in business.

Ackman urged Target’s management to sell its credit-card business to get rid of consumer-credit exposure and use the proceeds to buy back stock. He also wanted the company to realize the underlying value of its vast real estate holdings. Target bought back stock, but so far that has been a poor use of money. The company also moved partly on his credit-card suggestion but hasn’t heeded his real estate advice.

By the fall of last year, Ackman was getting into a bad spot. Some of his long-dated options were set to expire at the beginning of 2009. He couldn’t renegotiate them in the middle of the market panic.

On October 29, Ackman rented a giant theater in the Equitable Building in midtown Manhattan. He presented to hundreds of investors and reporters his plan for Target to spin off its real estate into an innovative real estate investment trust. The lengthy, complicated presentation of roughly 150 slides took about an hour and a half, with an extra 15 minutes for questions.

Ackman wasn’t the only one under strain. Target’s sales in stores open a year or more were falling. In December, Gregg Steinhafel, the retailer’s CEO, came to New York to meet with some investors. He panned the REIT idea and said Ackman was simply buried in his position and trying to jack up the shares to get out. In a sign of frayed nerves, he also attacked customers of Kohl’s, one of Target’s competitors, as having “low IQs.” Target smacked Ackman down twice, rejecting the proposal.

Target’s stock was tumbling; Ackman’s leveraged fund was doing much worse. By early March, as Target’s stock continued to fall, Ackman’s Target fund was down 93 percent.
The broken investment led to at least one strained friendship. Hedge fund manager Dan Loeb had put money into the Target fund and had been bombarding Ackman with emails, demanding that he let him out of his investment or wind down the fund. Loeb essentially ran an activist campaign against him, prompting Ackman to reorganize the fund: He waived management and incentive fees for investors in it, put $25 million of his own money in, and finally succeeded in extending the options. But he’s had enough of the excitement and leverage of a single-stock fund. “I think I may never do it again,” he says, chastened.

In early March, Ackman had another run-in with a New York State attorney general. Andrew Cuomo called him about the Target fund situation. “It’s kind of a scary way to begin a conversation with the AG!” Ackman says.

But Cuomo was calling to compliment him on how he treated his investors in revamping the fund and waiving his fees, saying that is what the hedge fund business needs. “How cool is that?” asks Ackman, excited as a boy.

Some investors think Ackman doesn’t understand the subtleties of retailing. “Activists may have been well intentioned, but many have seriously hurt many retailers by urging them to buy back shares and to increase debt,” says David Berman, a retail investment specialist who runs the hedge fund Durbin Capital. “Businesses were made unhealthy in front of our eyes, and management and boards were fooled by smooth-talking activists and bankers alike who misguided them.” Ackman counters that his advice has never saddled a company with too much debt.

By March, Ackman owned stock and controlled options in Target worth about 7 percent of the company. And he was gearing up for the big fight to get board seats. At Target’s annual meeting in May, Ackman is running for a position on the company’s board. He has recruited four other candidates who have specialized in real estate, credit cards, and retailing to serve on his slate. “It’s going to be very high-minded,” he says of his campaign. But he is also evincing the old stubbornness. “The only Stalinesque election process in America is the election for directors of American corporations,” he tells me. “And I just think that’s wrong.”

Maybe because Ackman has lost so much money with Target, he’s been more reflective lately. “The investment business is about being confident enough to know that you’re right and everyone else is wrong. Yet you have to be humble enough that you recognize when you’ve made a mistake,” he says. “Earlier in my career, I think I had the confidence part pretty solid. But the humbleness part I had to learn.’’

While he concedes that the Target investment was structured badly at first, he won’t back down on it. It’s up more than 40 percent since he injected his own cash: “I continue to believe that the investment in Target is not a mistake.”

Bill Ackman remains optimistic.

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