Activist investor Bill Ackman said he purchased an 11 percent stake in Borders Group Inc., the second- largest U.S. bookstore company, sending the shares up the most in 10 months.
``The stock's cheap in our opinion, and the company seems to agree,'' Ackman said today at the Value Investing Congress in New York. Borders, based in Ann Arbor, Michigan, has ``one of the most aggressive share-repurchase programs I've ever seen.''
Borders shares may be worth $36 within the next 18 months, Ackman said. The stock rose $2.11, or 9.8 percent, to $23.65 at 4:16 p.m. in trading on the New York Stock Exchange, its biggest gain since January.
``They need to fix it or get rid of'' the international and mall business, Ackman said. ``I think management understands that. The reason why it's a passive investment is because we like what management is doing.''
The company had 62 million shares outstanding as of Aug. 25, an 11 percent decline from the 70.3 million shares it had a year earlier. The company authorized the repurchase of as much as $250 million of its shares in February 2005.