Pershing Square Capital Management is abandoning its activist battle with retailer J.C. Penney Co.—at a loss of nearly half a billion dollars.
The hedge fund will sell its entire 18% stake in the struggling company, Penney’s said in a prospectus. Pershing Square said it had hired Citigroup to underwrite the sale of its 39.1 million shares, just after Penney’s announced another decline in revenue. That announcement allowed Ackman, who as a director had knowledge of those figures, to sell.
The move comes just weeks after Pershing Square chief William Ackman resigned from Penney’s board. Ackman had clashed with his fellow directors, pushing for the replacement of both Penney’s chairman and interim CEO, Myron Ullman. Penney’s brought Ullman back into the fold earlier this year after it ousted Ackman’s hand-picked chief, former Apple Inc. marketing executive Ron Johnson, who oversaw huge losses at the retailer.
Ackman himself admitted that Johnson’s stewardship, which included ending sales, was “close to a disaster.”
Citi will sell off Pershing Square’s shares for $12.90 each, below its already battered current stock price. The hedge fund paid about $25 per share when it bought the stake in 2010 and 2011.
Ackman admitted in a recent letter to investors that “retail has not been our strong suit.” Still, in spite of the big losses on Penney’s and on nutritional supplements company Herbalife, Pershing Square remains up 3.7% on the year.