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Why Tiffany Should Be Bill Ackman's Next Target

Could beleaguered jeweler Tiffany & Co. (TIF) be wedded to an activist investor real soon?

Shares of Tiffany rose as much as 1.5% in early trading on Tuesday on a report from DealBreaker that activist Bill Ackman could be poised to amass a stake in the company. Shares are now up a fraction at around $68.

The report follows Tiffany's Tuesday appointment of Canadian Pacific (CP) exec Mark Erceg as chief financial officer. Erceg had served as CFO of the railroad operator since May 2015. Last week, Canadian Pacific said Ackman resigned from its board, fueling speculation he would follow Erceg to Tiffany. He joined Canadian Pacific's board in 2012, leading an effort to install new board members and management. In an Aug. 5 filing, Pershing Square confirmed it excited its stake in Canadian Pacific.

A Pershing Square spokesman declined to comment on the rumors.

Should Ackman put money to work in Tiffany, it would closely resemble the thesis behind a recent stake Pershing took in burrito joint Chipotle (CMG) : a well-known consumer brand that has fallen on hard times and needs fresh ideas in light of a share price that has gone drastically lower.

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Tiffany reported second-quarter earnings, adjusted for one-time items, declined 5% from the prior year to 86 cents a share. Despite persistent struggles in...