Saying that J.C. Penney Company, Inc. (NYSE:JCP) is facing difficult times is an understatement. Unfortunately, things are not getting any better with former board member and hedge fund manager William Ackman selling his roughly 18 percent stake in the company.
Two weeks after resigning from the board, Ackman decided to unload his stake in Penney at $12.90 a share.
At that cost per share, his stake had a value of $504 million. A nice chunk of change, isn’t it? While this may seem like a lot of money, and it is, you have to consider this: selling at this price left him with a loss of approximately $473 million.
J.C. Penney Company, Inc. (NYSE:JCP) Moving On
The company filed a prospectus with regulators to making note that Ackman and his firm, Pershing Square Capital Management, had intentions to sell its 39.1 million shares in the company.
If you have been following Penney, you know that Pershing has been a big supporter for just about three years. In the process, the hedge fund became the company’s biggest shareholder.
Here is the kicker: over the years, Ackman and company paid roughly $25 a share. By selling at $12.90 a share, you can do the math to see how badly this investment worked out.
Although this is a big deal, both for Ackman and J.C. Penney Company, Inc. (NYSE:JCP), the two can finally move on from one another.
It was just three years ago when he felt that the company could be turned around, doing bigger things in the retail space. However, this never came to fruition. In fact, things just got worse when Ron Johnson was brought on board to head the company.
Despite the fact that Ackman has moved on from his investment in Penney, others are diving in with hopes of a turnaround to come. For example, George Soros’ firm holds a nine percent stake in the company.
Kyle Bass, the man in charge of Hayman Capital, has reportedly purchased a nice chunk of shares.
This appears to be the end of a three year saga between J.C. Penney Company, Inc. (NYSE:JCP) and William Ackman. There were some good and bad times over this period, but as of late the relationship soured as things took a turn for the worse.
What does the future hold for this once proud retailer? Are you following in the footsteps of Ackman? Share your thoughts in the comment section below.