J.C. Penney & Company, Inc. (NYSE:JCP) has had its stock downgraded to sell from neutral by a UBS analyst today. The company, which is backed by Bill Ackman, has dealt many problems since the activist began trying to turn it around. It is clear that analysts are no longer certain such a job can be accomplished.

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Stock in J.C. Penney & Company, Inc. (NYSE:JCP) is taking a huge tumble on the news this morning. At the time of  writing, the firm’s stock had fallen by 6% to $18 per share. The retail giant has been recovering, and turning around, for far too long, investors are fed up and they want out.

A second factor, divorced from this report, may be Ackman himself. The J.C. Penney turnaround has largely relied on his investment and his plan for the company. With the success of his Herbalife Ltd. short being less than a foregone conclusion at this stage, perhaps investors who followed the fund manager into the stock are having second thoughts.

Herbalife Ltd. (NYSE:HLF) shares had dropped by just over 1% at the time of writing. Other fund managers, most notably Dan Loeb, have gotten in on the other side of that trade. Loeb alone has taken an 8.4% stake in the company. He’s not the only one betting long on the company, though he does seem to have the most confidence, by sheer magnitude.

What was a battle between Ackman, who is generally regarded as a really smart guy and some company, which is generally regarded to be a pyramid scheme, has become a battle between a really smart guy and some other really smart guys. Ackman is no longer correct by default.

J.C. Penney may be suffering from its association with the hedge fund manager, but that is clearly not the only problem at the retailer. In the last twelve months the firm’s shares have fallen by almost 50%. Sales have dropped off in recent quarters, as the branding change has confused the company’s customers.

J.C. Penney used to be about value, offering savings to all who came through its doors. Ackman’s plan for the firm, led by former Apple Inc. (NASDAQ:AAPL) retail head, Ron Johnson, involves maximizing revenue per square foot, by setting up boutique stores inside each J.C. Penney premises.

The idea looks good on paper, it really does, but its execution is either proceeding more slowly than was predicted, or it is a fantasy. Perhaps completely changing the perception of a brand like J.C. Penney & Company, Inc. (NYSE:JCP) is not as easy as investors hoped. Either way the company’s figures are not showing the necessary improvement.

Hedge funds are based on confidence, if a manger cannot impress upon investors that he can make them a return, he will simply not succeed. There are several ways to do this, but the most important one is based on returns. Ackman may have a difficult first quarter if two of his big bets begin to turn against him at the same time.

The price target set by the UBS report was $13. Shares are currently trading at around $18. They have a long way to fall to reach that level, and may continue in that direction for the rest of the day. Ackman’s bottom line is looking worse and worse. Bill Ackman would be very unlucky to have both of these bets go against him at the same time.

J.C. Penney & Company, Inc. (NYSE:JCP) will be one of the most important movers on the market today as Ackman followers try to gauge the effects of yesterday’s Herbalife Ltd. (NYSE:HLF) move on that trade. A war on two fronts is almost impossible to win. It will be an interesting January at Pershing Square.