U.S. activist investor Jonathan Litt on Monday called for Canada's Hudson's Bay Co to consider going private and to monetize its vast real estate holdings, sending shares in the owner of Saks Fifth Avenue up 15 percent.
The company, also known as HBC, said it would review the letter from Litt, whose activist real estate hedge fund Land & Buildings Investment Management disclosed it had bought 4.3 percent of Hudson's Bay.
HBC stock had lost about a third of its value this year amid declining sales at its retail stores, which include Saks, Lord & Taylor and the 347-year-old Hudson's Bay brand.
The company this month said it would cut 2,000 jobs as part of a restructuring of its retail business.
The stock fell to a record low on Friday, partly due to investor frustration that the company has yet to announce plans to monetize its more than $10 billion in real estate assets. They include its Saks on Fifth Avenue in New York City, which is valued at $3.7 billion.
Shares peaked just shy of C$30 two years ago but investors have since complained the value of its real estate holdings are not reflected in the price of its stock, which has a market capitalization of C$1.6 billion ($1.21 billion).
Litt called on the board to focus on that issue, saying he estimates the real estate holdings are worth C$35 per share, nearly four times HBC's closing price on Friday.
"The path to maximizing the value of Hudson's Bay lies in its real estate, not its retail brands," said Litt, a former Citigroup real estate analyst. "If there is a smarter and better use of any or all of the locations, stores should be closed and redeveloped and put towards their optimal use."
In addition to its North American operations, HBC owns European department store Galeria Kaufhof. It also holds majority stakes in joint ventures worth over C$8.1 billion ($6.1 billion) for its property holdings in North America and Europe.
HBC shares closed up C$1.34 at C$10.22 in Toronto after reaching a high of C$10.45.