If you had asked me yesterday, I would have said Mike Ullman’s job — formerly known as interim CEO of JCPenney (JCP), but better known as the man currently in charge of fixing Ron Johnson’s mistakes — was anything but fun.
Today, I’ll upgrade that to downright awful. As if Ullman doesn’t have enough on his plate, now JCP’s largest stakeholder is calling for his head.
Yes, the one and only Bill Ackman — the hedge fund manager and activist investor who owns 18% of JCP’s stock — is pressing the company to change its head honcho in the next 45 days. Investors were excited by the prospect yesterday … but not so excited when Ackman added an “or else” to his demand.
Without a new CEO, Ackman says he will sell his stake. (Cue today’s 4% dip.)
Lucky for Ullman, the JCPenney board and … well … most of the financial world seems to be on his side. (In a theoretical sense, at least. Shoppers are hardly flocking back to the department store, nor are investors running to snatch up the beaten-down stock, which has shed 40% of its value over the past year.)
The board roundly dismissed Ackman’s demands. As The Wall Street Journal reported:
Late Thursday, Penney’s board blasted Mr. Ackman, saying his actions were “disruptive and counterproductive” and arguing that he had been “integrally involved” in the events that caused Penney’s prospects to deteriorate. The company also lined up executives to defend Mr. Ullman’s track record.
Remember, Bill Ackman was the one who pushed for failed CEO Ron Johnson — who stupidly eliminated sales at the stores — to be pulled on board in the first place. And while he may be right that Penney needs to step its game up, he’s also lost a good bit of his credibility.
Heck, talking heads point to Ackman’s “frat boy” antics, while his activist investing has been referred to as a “tantrum.” And Josh Brown — the man behind The Reformed Broker – reacted like this:
Ackman just broke the cardinal rule of, well, everything – owns 18% of $JCP and just publicly threatened to dump it. WTF?
— Downtown Josh Brown (@ReformedBroker) August 9, 2013
Of course, others just shrugged — and for good reason. The shitshow of JCPenney is old news and, at this point, so are Ackman’s headline-grabbing demands.
Yawn, Ackman on the tape about JCP again
— zerohedge (@zerohedge) August 9, 2013
Another reason people are getting sick of Bill Ackman: He has been making big headlines but bad calls for most of this year. He caused a big hullabaloo when he heavily promoted his short position in Herbalife (HLF) earlier this year, for example.
The stock has doubled since then.
No wonder he’s actual become a laughingstock to many in the biz.
$FB now in the red for the day. What happened? Did Ackman go long?
— Paul R. La Monica (@LaMonicaBuzz) July 31, 2013
In all seriousness, the best summary of what’s going on, though, might just be this passage from Laura Heller at Forbes.
Ackman is right about a lot things. Penney needed to change. It needs a strong leader with retail merchandising experience. But it also needs to learn from its mistakes, something Ackman himself doesn’t seem capable of.
Of course, JCPenney has likely learned from its mistakes, which have been glaringly obvious, but that’s hardly the same as them being undone. And whether it’s Ullman or someone else at the lead, there’s nothing but an uphill struggle from here.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities. Follow her on twitter @alyssaoursler.