Buckle up, Nordstrom shareholders. Volatile trading ahead. Activist investor Ryan Cohen is building up his stake in the department store chain as he looks to shake up the board, people with knowledge of the matter told CNBC. Cohen’s interest in the company was first reported by The Wall Street Journal. Not surprisingly, Cohen’s entry has ignited a rally in Nordstrom shares, which have spiked as high as $27.15 in trading on the news. Recently, the stock is up more than 20% “In his view, Nordstrom’s performance over the last decade calls for an activist role as it continues to show inconsistent performance, and more recently has not been able to keep up with its department store peers despite its better brand and loyal customer base . . ,” wrote Dylan Carden, an analyst at William Blair in a research note late Thursday. Still, it’s wise to question whether Cohen is the right investor for the project. Chewy’s founder is aiming to remove former Bed Bath & Beyond CEO Mark Tritton from the board’s compensation committee. Tritton once worked at Nordstrom, and Cohen thinks this makes him “conflicted and unqualified” to serve, the Journal report said. This isn’t the first time Cohen has had Tritton in his crosshairs. Cohen briefly built a stake in Bed, Bath & Beyond in March. A few months later, Tritton quit his job and Cohen made a huge profit when he sold his shares. Home goods retailers don’t pay either. It missed debt payments and is expected to soon file for bankruptcy protection. Shares of Nordstrom mountain JWN 1D rose after reports said Ryan Cohen is building a stake in the department store chain. While not terrible, Nordstrom has its own problems. Sales for fiscal 2022 are expected to remain below fiscal 2019 levels, following a weak holiday season. ‘Begging for activists’ The department store business is not easy as shoppers buy more goods online or avoid big malls. To Nordstrom’s credit, it has tried to respond in various ways, but its track record of success is unclear. Nordstrom caters to high-income consumers, which should help protect them from economic weakness and tight budgets due to rising inflation. But the performance doesn’t reflect that. However, it has been plagued by inventory problems in its off-price Rack business, which has for a time been a bright spot in its portfolio. poor shelf performance is even more disturbing when one considers the success of other comparable retailers like TJX Cos. Nordstrom has suffered from management’s reluctance and expensive bets on new ventures, Carden said. He cites three examples: Trunk Club, a subscription clothing business written down to zero; Local, efforts to reach consumers outside shopping centers, which the company has shown some performance metrics; and “sprawling” New York City flagships. Before Cohen’s news, analysts had an average rating of hold on the stock with a target price of $18.12, according to FactSet. Judging by other stocks that Cohen has participated in, including GameStop, where he serves as chairman, shareholders should expect a wild ride ahead. For its own part, Nordstrom has indicated it will listen to what Cohen has to say. “While Mr. Cohen has not sought discussions with us over the years, we are open to hearing his views, as we do with all Nordstrom shareholders,” the company said in a statement. “We will continue to take actions that we believe are in the best interest of the company and our shareholders.” ‘Mate to squeeze’ Cohen’s biggest obstacle is the 30% stake of the Nordstrom family. A person familiar with the matter told CNBC Cohen had met with family members, but the timing of the conversation was unclear. Erik Nordstrom has been the sole CEO of the department store since March 2020. Before the change, the management structure was shared between Erik Nordstrom, his brother Pete Nordstrom and the late Blake Nordstrom, who died of lymphoma in 2019. The title of co-president and to be a director. Pete Nordstrom is still involved in the business and holds the titles of president and brand officer. Don Bilson, an analyst at Gordon Haskett, said Cohen’s actions appeared personal – and serious. Cohen has accumulated valuable stock, recruited two unnamed executives who may join the board and flown to Seattle to meet with family members, he said. Mount JWN 5Y Like many department stores, Nordstrom’s stock has struggled in recent years as shoppers shop more online than in malls. Analysts also note that El Puerto de Liverpool, a department store operator in Mexico City, has a 10% stake in Nordstrom. “Before Cohen and the Meme Army showed up, we thought Liverpool was an interesting wildcard to watch out for,” Bilson wrote in a research note on Friday. All this means, the threat of a short squeeze is high. Try this math: According to Bilson, 22 million shares were sold short. There are 160 million shares outstanding, but some are in the hands of the family, Liverpool, and now, Cohen. This means the effective float is closer to 70 million, he said. “The situation is ripe for a squeeze, especially if you consider that Cohen’s meme-stock army does not mess around when they smell blood and could not care less about the fundamentals,” said Bilson. “Don’t think for a second that this doesn’t fit Cohen’s calculations.” Bilson said the key date for the calendar is February 17, which is the deadline for nomination of council members. If an agreement was made between Cohen and the company, it should have happened earlier. Otherwise, the next key date will be around April 7, which is when Nordstrom’s proxy statement usually comes out. — CNBC’s Gabrielle Fonrouge and Michael Bloom contributed to this report.