Hedge fund manager Bill Ackman can’t be having a good day.His firm Pershing Square’s biggest stake, J.C. Penney, is tanking today after the retailer missed earnings estimates yesterday and announced they would be cutting their dividend to focus on rebranding and remaking the company’s shops.
As J.C. Penney’s largest shareholder, Ackman owns about 39 million shares of the retailer—about 17.9% of the company. The stock is down over 15% today. He has been leading a very public effort to completely rebuild the company.
And as if to rub salt into the would, one of Ackman’s earlier failed activist targets—discount retailer Target—is rallying today. The company raised its yearly guidance after a positive earnings report this morning, and is up around 0.65% today.
In case you need a refresher—in 2009, Ackman started a fund within his firm to bet solely on the rise of Target. He took an activist stake in the retailer and pursued a proxy fight with the company in which he attempted to replace four members of Target’s board. In the end, his effort to take over Target didn’t work, and Ackman’s nearly $2 billion investment in the company lost about 80% of its value. Ackman had to return money to investors and even contributed about $25 million of his own money to help pay them back.
Although Ackman’s activist stake in J.C. Penney has been successful so far and the company’s efforts to rebuild its image and brand is being led by former Apple retail guru Ron Johnson, it’s obvious that the effort to rebuild J.C. Penney is going to take way longer than expected.
On the other hand, it’s the Ira Sohn Investment conference today, and Bill Ackman’s pick from last year—going long on Family Dollar—is up over 23%. Silver lining?
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