July 12 (Bloomberg) -- Activist investor William Ackman has accumulated a stake of more than 5 percent in Target Corp., the second-biggest U.S. discount retailer, a person with direct knowledge of his plans said.

Shares of Target rose the most in more than three years to a record.

Ackman, who has pressured companies including McDonald's Corp. and Wendy's International Inc. to reduce spending and sell divisions, will disclose the holdings in a U.S. Securities and Exchange Commission filing next week, said the person, who declined to be identified because the plans haven't been filed.

Target has drawn shoppers away from larger rival Wal-Mart Stores Inc. with products such as a four-piece baby bedding set by Amy Coe for $90 and a $20 madras swimsuit by Isaac Mizrahi. Profit has climbed five straight quarters, helped by growth in the company's credit-card division, after net income fell in 2005 for the first time in at least eight years.

``Most of these quote-unquote activist investors are looking to make a quick buck,'' said Jon Fisher, a Minneapolis- based portfolio manager for Fifth Third Asset Management.

The person didn't say what Ackman's plans for Target are.

Target's shares surged 6.1 percent on July 6 on speculation that the company might sell its credit-card unit. Company spokeswoman Susan Kahn refused to comment at the time.

``We are in the credit-card operations for the sole purpose of strengthening the relations we have with our retail guests,'' she said then.

Kahn didn't return a call seeking comment today. Ackman, through an assistant, declined to comment on his holdings.

Shares Rise

Shares of Target, which has 1,500 stores, rose $4.44, or 6.8 percent, to a record $70.04 at 4:18 p.m. in New York Stock Exchange composite trading. Before today, shares had gained 15 percent this year.

Ackman, general partner of Pershing Square Capital Management LP, and billionaire Nelson Peltz last year persuaded Wendy's to spin off its Tim Hortons unit and sell its Baja Fresh division.

McDonald's plans to use $700 million in proceeds from the sale of 1,600 Latin American stores to pay dividends and buy back stock, moves also urged by Ackman.

For the year ended Feb. 3, Target said profit rose 16 percent to $2.79 billion on revenue of $59.5 billion.

The credit-card unit contributed about 20 percent of Target's operating income during the first quarter, rising 53 percent to $693 million, according to Jeffrey P. Klinefelter, an analyst at Piper Jaffray & Co. in Minneapolis.

`Key Asset'

``Target's been pretty adamant that they see it as a key asset to keep,'' said Fisher, whose Cincinnati-based firm has $22 billion in assets including Target shares.

Another possibility would be for Ackman to push Target to sell its real estate and lease it back, said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich, with $9.6 billion in assets including Target shares.

``We hadn't considered a retailer that executes as consistently and excellently as Target to be a, well, target,'' Carol Levenson, research director at New York-based Gimme Credit, an independent research service in Chicago, said today in a note to investors.

Target earlier today said June sales at stores open at least a year climbed 3.3 percent, matching analysts' estimates. Wal-Mart same-store sales rose 2.4 percent.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net; Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Last Updated: July 12, 2007 19:36 EDT