J.C. Penney Company, Inc. (JCP), Herbalife Ltd. (HLF): Wednesday Wasn’t the Best Day for Bill Ackman

Soros’ stake represents less than 5% of the company, so legally, he did not need to disclose it. However, Ackman’s representatives believe that the Soros buy was done in concert with a large group of investors.

Also of note is CNBC’s interview with Bob Chapman. He’s been a harsh critic of Ackman for months, and his fund has been in and out of Herbalife stock since December.

In an interview on CNBC Wednesday, he predicted that Herbalife Ltd. (NYSE:HLF) shares would go to $300, and that the company will inevitably get bought out.

Next up: Air Products

But Ackman hasn’t lost his credibility yet. Shares of Air Products & Chemicals, Inc. (NYSE:APD) jumped nearly 3% after he announced that the company was his next target.

Contrary to another New York Post rumor (claiming he was struggling to raise the money), Ackman bought up 9.8% of Air Products & Chemicals, Inc. (NYSE:APD), stopping just short of the 10% threshold that would trigger the board’s recently adopted poison pill.

In this case, investors might be looking at some of his more recent successes. Although J.C. Penney and Herbalife Ltd. (NYSE:HLF) grab the headlines, they make up a relatively small percentage of Pershing Square’s portfolio.

Half of Pershing Square’s capital is tied up in Canadian Pacific and Procter & Gamble — both of which have been big winners for Ackman. Shares of the former are up about 70% since Ackman won a proxy contest for control of the company; shares of the latter are up more than 30% since Pershing Square started accumulating a stake.

Without knowing his plans for Air Products & Chemicals, Inc. (NYSE:APD), investors should not blindly follow him into the position. Nevertheless, even with J.C. Penney and Herbalife, Ackman’s track record as an activist remains fairly solid.

Ackman’s positions

There’s a distinct possibility that the J.C. Penney rumor is completely bogus, and the stock is undervalued as a result. However, if it is true, investors should expect the retailer to report a disastrous quarter, and a further sell off is likely.

As for Herbalife, the stock has become completely divorced from the underlying business. With multiple hedge fund billionaires fighting over the company, playing it long or short could be a disaster.

Air Products & Chemicals, Inc. (NYSE:APD) might be another big winner for Ackman, assuming he can replicate his past successes in similarly boring companies like Canadian Pacific and Procter & Gamble. Yet, it would be better to wait for Ackman to present his case before moving in.

For the time being, investors might wish to avoid these companies entirely.

Joe Kurtz owns shares of J.C. Penney Company. The Motley Fool has the following options: long January 2014 $50 calls on Herbalife Ltd. (NYSE:HLF).
Sam is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Wednesday Wasn’t the Best Day for Bill Ackman originally appeared on Fool.com is written by Sam Mattera.

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