Target Draws Activist Interest as Toms Capital Takes Large Stake
Hedge fund Toms Capital Investment Management disclosed a significant position in Target, adding pressure to a retailer down 27% in 2025.
Target has a new investor looking over its shoulder.
Toms Capital Investment Management has taken a "big investment" in the struggling retailer, according to the Financial Times. The exact stake size wasn't disclosed, but the position is substantial enough to draw attention as Target navigates one of its rougher years.
Shares rose more than 1% Friday on the news, a modest bounce for a stock down 27% in 2025.
The Backdrop
Target's 2025 has been rough by any measure.
Same-store sales have declined for five consecutive quarters. Traffic trends turned negative in the spring and haven't recovered. The company's inventory management, once a competitive advantage, has shown cracks as consumer preferences shifted faster than merchants anticipated.
The stock traded near $180 in early 2024. By December 2025, it sits around $125. That's a stark contrast to Walmart, which hit all-time highs this year by leaning into grocery, e-commerce, and price-conscious consumers.
Target's core customer—a suburban shopper seeking affordable style—has pulled back on discretionary spending. Categories like home goods and apparel, which carry higher margins than groceries, have suffered disproportionately.
Who Is Toms Capital
Toms Capital is a New York-based hedge fund with a reputation for patient, value-oriented investing.
The firm typically takes positions in companies where it sees a disconnect between intrinsic value and market price. Unlike more aggressive activists who demand immediate changes, Toms tends to work constructively with management, at least initially.
That approach may suit Target's situation. The problems aren't structural—Target still has a strong brand, prime real estate, and loyal customers. The issues are execution-related: assortment, pricing, and marketing missteps that should be fixable over time.
What Could Change
Activist pressure typically accelerates timelines.
Target CEO Brian Cornell has already announced initiatives to improve performance, including a refocused merchandise strategy, enhanced price perception, and renewed investment in stores. But results have been slow to materialize.
An activist presence could push for faster action on several fronts:
Cost structure. Target's SG&A expenses have crept higher relative to sales. Headcount reductions or supply chain optimization could improve margins.
Capital allocation. The company has maintained its dividend and share repurchase program despite weak performance. An activist might argue for redirecting cash toward growth investments or accelerating buybacks at depressed prices.
Leadership. While Cornell has a strong track record, boards sometimes make management changes when new investors arrive. Target's director elections in 2026 could become a focus.
The Bull Case
Target bulls argue the stock is oversold.
At roughly 12 times forward earnings, Target trades at a significant discount to its historical average of 16-17 times. The company generates $6-7 billion in annual free cash flow, supports a 3.5% dividend yield, and owns most of its real estate.
Retail is cyclical. When consumer sentiment improves—whether from lower rates, stabilizing inflation, or simply time—Target's discretionary categories should recover. The company's omnichannel capabilities, including same-day fulfillment and curbside pickup, position it well for a rebound.
The Bear Case
Bears point to secular headwinds.
Amazon continues taking share in categories where Target once dominated. Discount chains like Dollar General and Five Below have expanded into Target's value-oriented customers. And Walmart's grocery strength gives it a recurring traffic driver Target lacks.
The suburban demographic is also changing. Millennials, now the largest cohort of homebuyers, shop differently than Baby Boomers did. They're more likely to research online, compare prices, and make targeted purchases rather than browse stores.
What Happens Next
Toms Capital's stake is newly disclosed, so the next moves aren't clear.
The fund could seek board representation, which would require a proxy contest if management resists. It could engage privately with Cornell and directors, pushing for specific changes behind closed doors. Or it could simply hold the position, betting that Target's problems are already reflected in the stock price.
For now, the signal is clear: sophisticated investors see value in Target that the market is missing. Whether they're right will depend on execution in 2026.