Ackman Terms J.C. Penney Investment a Failure
“We have had three failures on the long side: Borders Group, Target, and J.C. Penney,” noted William Ackman’s Pershing Square Capital Management in the fund’s second-quarter letter to investors. “Clearly, retail has not been our strong suit, and this is duly noted,” he added in a section of the letter titled “Mistakes.”
Excluding the now-defunct bookseller, retailers generally suffered from softer-than-expected sales in the second quarter as tough economic conditions — exacerbated by January’s payroll tax increase — kept purchases to necessities, particularly for low-income customers. Of course, for J.C. Penney (NYSE:JCP), the weak retail environment was made all the more difficult to navigate by the company’s internal problems.
In the past few months, Ackman has been making headlines for his disagreement with the board of directors of J.C. Penney and his eventual resignation from the board as well as the ongoing controversy surrounding Herbalife (NYSE:HLF). His investments in both companies have not only created noise, but losses.