Ackman Feels a $500 Million Pinch from J.C. Penney

Ackman Feels a $500 Million Pinch from J.C. Penney

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Now that’s a discount: After giving up on more than two years’ worth of efforts aimed at turning around J.C. Penney, activist hedge fund investor Bill Ackman sold his 18 percent stake in the retailer for $504 million – about half what he paid.

Rather than just dumping the shares on the open market, where the stock closed Monday at $13.35, Ackman used Citigroup as an underwriter to offer his more than 39 million shares at a price of $12.90 apiece. That adds up to a loss of about $473 million for Ackman’s firm, Pershing Square Capital Management.

Now that Ackman has washed his hands of Penney – and, implicitly, of retail investing in general, as he acknowledged it hasn’t been his “strong suit” – the company’s management and remaining directors are still stuck with the unenviable task of trying to turn around the turnaround. Given that JC Penney’s losses have been larger than Ackman’s, that’s going to be tough.

Ackman’s Penney problems likely aren’t over just yet either. Almost certainly, a wave of shareholder lawsuits that will seek to stick him with some of the pain his fellow investors suffered on JC Penney.

Business journalist Suzanne McGee spent more than 13 years at The Wall Street Journal before turning to freelance writing. Author of the book Chasing Goldman Sachs, she has written for Barron’s, The Financial Times, and Institutional Investor.