Ackman’s Penney-sized revenge?

October 1, 2013

It’s hard to say that Bill Ackman came out of the J.C. Penney debacle looking good. But in one regard the hedge fund manager did score a minor victory: he and his Pershing Square Capital Management sold their shares before the bloodbath began in the ailing retailer’s stock.

In hindsight, the $12.90 a share price that Pershing Square sold its 18 percent stake in Penney to Citigroup doesn’t look so bad compared to the $8.73 a share price the stock closed at on Tuesday. There was much made in the press about the $473 million loss Ackman’s fund was saddled with after the hedge fund manager’s push to remake Penney into an upscale retailer failed. The criticism was justified as even Ackman conceded he isn’t great at retail.

But Ackman’s quick late August exit from the stock after first blistering the company’s board for taking too long to find a permanent CEO doesn’t look as bad in retrospect. Forbes’ Nathan Vardi even went so far a few days ago to write that Ackman’s decision to bolt on Penney looks like a “brilliant” decision.

Now that maybe giving Ackman a bit too much credit given how badly Penney played out for the past two years. But at least, Ackman’s Pershing Square looks a little better than the hedge funds and big investors that also reported having big stakes in Penney and have yet to report selling any shares–like Larry Robbins Glenview Capital or George Soros’ family office. (At last count, Glenview had a 5.2 percent stake and Soros had a 9.1 percent stake).

Glenview picked up a good chunk of its stake from the huge block of shares that Ackman sold to Citigroup and the Wall Street firm than turned around and unloaded. Another buyer of a big block of stock was Kyle Bass’ Hayman Capital.

For a brief time in early September it looked like hedge funds were falling in love with Penney with Ackman out of the picture. But it looks like that was simply nothing more than a late summer fling.

On Monday, one big Penney investor, Richard Perry’s Perry Capital, disclosed it cut its once considerable 8.62 percent stake to 3.82 percent. It’s not clear when Perry fund sold those shares but it would appear to coincide with the big slide in the retailer’s stock that took place after it announced a plan to raise $1 billion in badly need cash by selling 84 million shares at $9.65 a piece.

Now we wait for other hedge funds to come clean on whether they stuck with Penney or also threw in the towel. Stay tuned for more filings.

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