Aug 11 (Reuters) - Pershing Square Capital Management, whose manager William Ackman lost a heated proxy contest to elect new directors to Target Corp's (TGT.N) board earlier this year, cut its ownership stake in the retailer to 4.4 percent from 7.8 percent.

In a filing with the U.S. Securities and Exchange Commission on Tuesday 11 August, Pershing Square said it increased its actual common stock ownership to 3.5 percent from 3.3 percent, but sold some call options that entitled it to buy shares, resulting in the lower overall stake.

The overall stake of 4.4 percent consists of 3.5 percent in shares of common stock and 0.9 percent in stock-settled call options, Pershing Square said in the regulatory filing.

(Reporting by Dhanya Skariachan in Bangalore; Editing by Derek Caney)