Best Buy Co. shares rose and call-option trades jumped to almost triple the full-day average over the past four weeks on speculation that billionaire investor William Ackman bought a stake in the retailer.
A call option gives the owner a time-limited right to buy a certain quantity of an underlying security at a specified price.
The trading was spurred by speculation that Ackman's Pershing Square Capital Management LP hedge fund "purchased a stake in the company," Patrick Mortimer, director of options trading at Pipeline Trading Systems LLC in New Hope, Pennsylvania, said in a report to clients. "Option players are taking a bullish stance."
Sue Busch, a spokeswoman for the Richfield, Minnesota-based company, said the world's largest consumer-electronics retailer won't comment about trading of its shares or speculation about a possible investment by Pershing. Bethany Norvell, a spokeswoman for Pershing, declined to comment and said the company doesn't address rumors.
Ackman is an aggressive hedge fund manager known for seeking changes in the companies whose stock he buys. In 2009 he waged an expensive battle with Target Corp. After failing to convince the retailer to sell the land under its stores, Ackman tried to win seats on the retailer's board for himself and four allies. Shareholders soundly rejected the plan. He recently unloaded the last of his Target stock.
Almost 20,000 calls to buy Best Buy shares changed hands as of 11 a.m. in New York, 11 times the number of puts to sell. The shares rose 1.4 percent to $30.98 and the most-active contracts were June $33 calls, which expire June 17 and have a strike price 8.1 percent above the last close. Best Buy hasn't closed above $33 for three months. Those contracts rose 71 percent to 41 cents.