We now have a better indication about what Bill Ackman may plan to do with his shares of J.C. Penney Company, Inc. (NYSE:JCP). He just might be planning on selling out of the retail chain and simply walking away, although analysts at more than one firm have said they thought this was unlikely.
Last week he tried to bully the company into speeding up its search for a new permanent chief executive officer and fire the current chairman. Then on Monday he resigned from the board, giving up his push. Now regulatory filings indicate that he has entered into an agreement with the retail chain to sell his restricted shares.
Bill Ackman could sell restricted shares
Reuters reports that the filings deal with the sale of restricted shares owned by Bill Ackman and his funds. It enables them to sell off those restricted shares if it decides to do so. The deal enables Bill Ackman to make up to four requests to J.C. Penney Company, Inc. (NYSE:JCP) to register his restricted common stock for sale. The rights to sell Bill Ackman's shares end when he and all of his funds own less than 5 percent of the company’s stock.
Restricted shares are sold only to some executives of the company and certain shareholders in order to keep them from selling them off at times that could affect the company in an adverse way. Sales of restricted shares must be registered with the Securities and Exchange Commission or through another exemption.
Ackman was not allowed to sell his shares right after he resigned from the board because he had access to non-public information while serving as a board member. So it may be some time before he begins selling. He certainly won’t sell them until after the retail chain’s next earnings report, which is due Tuesday.
When will Bill Ackman sell?
Currently Bill Ackman has about an 18 percent stake in J.C. Penney Company, Inc. (NYSE:JCP). He hasn’t publicly said what he will do with all of his shares, although if he sells them at their current price, his losses would add up to more than $300 million.
Shares of the retail chain fell 1.5 percent within the first 30 minutes of trading on Friday.