More on activist investor Ackman and ADT

There was additional speculation this week about whether activist hedge-fund manager William Ackman is intending to take a stake in The ADT Corp. An article in The New York Times said that his investing in the home security/home automation giant is more likely than his buying into FedEx, another company he is rumored to be considering.

The article said that's basically because Ackman would have less say in FedEx, a much larger company than ADT, where he could wield greater influence.

There's a possibility we could find out the answer later this week. Bloomberg reported July 9 that Ackman, who runs $12 billion Pershing Square Capital Management, was raising $1 billion over the next 10 days to buy a stake in a “large-capitalization, investment-grade U.S. corporation that principally operates in one business” that he didn't name.

If he's successful, that would mean he'd have the money by this Thursday or Friday and he could reveal his pick then. However, he also could wait until later this year before announcing the choice, Nicholas Heymann, co-group head of global industrial infrastructure for New York-based William Blair & Company, told me.

"The issue is once you raise the money you have to put it to work," he said. However, Heymann said, "chances are, especially if it happens to be including some of his other 12 billion dollars of funds that he manages in addition to the $1 billion single stock fund, you and I are not going to know what his positions are until they're reported 45 days after the close of the quarter, so we could end up hearing about this in mid-November."� The news could come earlier if Ackman chooses to voluntarily disclose it, Heymann said.

ADT has told Security Systems News the company does not comment on market rumors.

But some other important industry news is also related to ADT, and that's the recent announcement that Monitronics plans to acquire Security Networks next month.

“We continue to look at the ramifications of the Security Networks acquisition by Monitronics as it relates to the implied value of ADT,” Heymann said.

In a July 11 William Blair & Company industry report authored by Heymann, the company explained how that pending deal sheds light on the value of ADT. Here's some more detail from the report:

Our belief that ADT remains the most undervalued company in our multi-industry universe was starkly highlighted with the announcement after the close yesterday that Ascent Capital Group's (ASCMA $84.15) primary operating subsidiary, Monitronics International, has signed a definitive agreement to acquire Security Networks for total compensation of $507.5 million, or about 60 times Security Networks' average recurring monthly revenue. Before the announcement of this transaction, Monitronics was the third-largest North American residential security company and Security Networks was the 14th-largest. Following the completion of the proposed acquisition, the combined company will have 1.034 million customers (almost the same number as Protection One, the current second-largest North American residential security provider) and, on a pro forma basis, hold just under a 4% share of the North American residential security market.

� The valuation paid for Network Securities by Monitronics would value ADT between $67 and $74 per share. On an implied market capitalization basis, ADT would be valued in a range of $15.4 billion-$16.8 billion, well above the company's current $9.2 billion market capitalization.

ADT stock closed at $42.68 per share today. That's down 28 cents or .65 percent from its $42.96 close yesterday and Heymann speculated later today that talk that Ackmann was NOT interested in buying into ADT may have caused the drop, the opposite of last week when ADT stock climbed based on speculation that Ackman was interested. "We think Ackman may have been at this big hedge fund meeting this afternoon and said something that implied he was NOT looking at ADT ... or an ADT type company," Heymann told me in an email this afternoon.

So which company does Ackman have his sights on? The situation is decidedly very fluid, and very interesting. I'll be reporting more on this. Stay tuned!