Ackman Went “Insane” But He’ll Survive J.C. Penney “Disaster” Says Blodget
Bill Ackman’s battle to remake J.C. Penney (JCP) has finally ended. The hedge fund manager, whose Pershing Square Capital Management owns about 18% of the retailer’s stock, has resigned from the company’s board after years of conflict.
Related: J.C. Penney Board Fiddles with Ackman While the Company Burns
The last straw apparently was Ackman’s unsuccessful push to replace the company’s current chairman Thomas Engibous and interim CEO Myron Ullman, whom Ackman helped to oust in 2011. Ullman then was replaced by Ackman’s handpicked successor, Ron Johnson, best known for creating Apple’s (AAPL) retail store operations. But Johnson failed badly and J.C. Penney stock plunged more than 50 percent on his watch.
“It was a complete disaster from start to finish,” says The Daily Ticker’s Henry Blodget about Ackman’s role at J.C. Penney. “He buys up a lot of stock. He brings in his magical CEO who’s going to transform everything… finally he is forced to step in and fire his handpicked CEO, and then he basically goes insane four months later.”
Related: J.C. Penney Remains a Disaster; Short the Stock: Howard Davidowitz
That’s when Ackman tried again to recruit a new CEO to replace Ullman a second time as well as the company’s chairman. But this time the board resisted and Ackman stepped down.
“He got exactly what he wanted. It just didn’t work,” says Blodget. “This is the classic example of the financial guy coming in, trying to re-engineer things and then just walks away.”
So what happens next to Ackman?
“He’s down about half a billion dollars on the stock but he will survive that” as he has other bad investments, says Blodget. “Some of his bets work, some of them don’t."
Related: George Soros Buys 8% Stake in J.C. Penney; Should you Follow?
As for J.C. Penney, the company announced that retail industry veteran Ronald Tysoe would join the board and it would announce another director soon.
Even Ackman didn’t disagree with that decision, at least publicly. “At this time, I believe that the addition of two new directors and my stepping down from the board is the most constructive way forward for J.C. Penney and all other parties involved,” Ackman said in a statement J.C. Penney released Tuesday.
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