In the past few months, Bill Ackman has been under a lot of stress, at least according to those who dislike him intensely and these people are not a small bunch as was made clear in an Vanity Fair’s upcoming story.
Several notable and influential people in the hedge fund community have been less than excited about Ackman’s big short in Herbalife Ltd. (NYSE:HLF).
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
While the critics keep themselves busy with how he is grossly mistaken about Herbalife Ltd. (NYSE:HLF), they have also dragged Ackman’s other failures including J.C. Penney Company, Inc. (NYSE:JCP) in the argument.
J.C. Penney Company, Inc. (NYSE:JCP) is proud to have Ackman as its largest shareholder with his ownership in 18 percent (39,075,771 shares) of the company.
The fact that J.C. Penney Company, Inc. (NYSE:JCP) posted very dull earnings yesterday gives more credence to the claims of Ackman’s critics. The company reported a loss of 32 percent in same store sales in Q4 was the most painful news of all, JCP also made a loss of $1.95 per share whereas analysts were looking for lesser damage, the consensus was $0.24 in adjusted losses per share.
Sales also missed expectations and came at $3.88 billion. Meanwhile JCP is tumbling on the NY trading floor, the stock has lost more than 15 percent of its share value at the time of this writing and was down over 18 percent earlier.
The question that pops up, as Julia La Roche pointed out, is how much Bill Ackman lost during and after this earnings showdown. Ackman entered JCP at around $25, so his losses so far exceed $273 million, assuming the stock closes at $18 today.
JCP has gone through another episode of tumbling stocks in January when it seemed that JCP investors just became restless and perhaps had reservations about Ackman’s ability to materialize a turnaround at JCP and decided to get out.
Ackman however, repeated his bullish take on JCP while on CNBC, just before the infamous public war between Icahn and Ackman commenced on Herbalife Ltd. (NYSE:HLF).
Some weeks later Icahn covertly pointed out Ackman’s habit of making wrong calls but never admitting his faults by referencing to his investments in JCPenney and Target Corporation (NYSE:TGT). He said,
“I’m sure he’s resolute about Target. I’m sure he’s resolute about JCPenney… He’s very rigid.”
Robert Chapman has also not fallen behind in thrashing Ackman for his poor investment choices, he said to Vanity Fair,
“You can almost see him puckering his nostrils so he doesn’t have to smell these inferior creatures. It’s truly bizarre, given that his failures—Target, Borders, JCPenney, Gotham Golf, First Union Real Estate, and others—prove he’s as fallible as the next guy. Yet, from what I hear, he behaves that way with just about everybody.”
While J.C. Penney Company, Inc. (NYSE:JCP) may not be a dead story already, critics of Bill Ackman have established that even if Ackman finds himself unsuccesful in engineering a turnaround at JCP, he will never admit that he was wrong. Some say he personifies the saying, ‘Often wrong, never in doubt.’