Ackman Throws In His Soiled JCPenney Towel

by Alyssa Oursler | August 27, 2013 9:35 am

Bill Ackman must have been jealous that Miley Cyrus was stealing all the headlines Sunday — so he stole them back Monday afternoon.

The high-profile hedge fund manager announced that Pershing Square[1] is selling its entire stake of struggling department store JCPenney (JCP[2]). Not that anyone who has followed the Ackman-JCP showdown should be surprised. A quick rundown:

• Ackman disclosed his 39 million-share stake — good for 18% of the company — in October 2010.
• The “activist” investor then brought in former Target (TGT[3]) and Apple (AAPL[4]) retail star Ron Johnson to turn around the company in Nov. 2011.
• Johnson eliminated sales and coupons, alienated customers, tried to bring sales back, then eventually got fired.
• Former chief Mike Ullman — who was CEO for seven years before Johnson — took the reins again.
• Ackman threw a temper tantrum earlier this month, demanding that Ullman be replaced within 30 to 45 days.
• The board wasn’t having it[5], and told Ackman he was not just “disruptive and counterproductive” but also “integrally involved” in events that have caused JCPenney’s demise.
• Ackman quit the board shortly after[6].
• Now he is selling his stake, which has lost around half of its value.

Better late than never, I guess.

Of course, while the brouhaha between Ackman and JCP might finally have reached an ending, both the investor and the retailer still have big losses to overcome.

Ackman’s other big headline-inducing investment of late was his short of Herbalife (HLF[7]) — a stock that has doubled since he began ripping on it. The two public flops caused Ackman to write a letter to investors last week admitting a few failures that began with a section titled “Mistakes.”[8]

Meanwhile, JCPenney posted an ugly wider-than-expected loss last week, along with its ninth straight drop in quarterly sales. And the stock — which has suffered a 46% haircut during the past 12 months — opened lower today following Ackman’s disclosure.

After the sale, Perry Capital — which owns 16 million shares — will become the largest shareholder … and hopefully the Ackman headlines (and the Miley ones, for that matter) will die a slow, quiet death.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/08/bill-ackman-jcpenney-jcp-towel/

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