It looks like Bill Ackman has finally flown the white flag in his activist fight for J.C. Penney. An SEC filing just released reports that Ackman’s fund Pershing Square has sold off the rest of their position in J.C. Penney Company (JCP). Pershing Square released that they began their sell on Aug. 23, 2013, and it was completed earlier today.
According to the SEC Prospectus released today, Pershing Square sold the rest of their 39,075,771 shares to the fund’s underwriter Citigroup. Ackman made his sell at the closing price of $13.50 per share.
Ackman has been the largest shareholder of the struggling retailer’s stock, owning approximately 18% of the company’s shares outstanding. According to GuruFocus, Pershing Square bought these shares at an average price of about $28.90, which means that it stands to lose over 50% of his initial investment, or around $600 million.
Ackman’s holding history as of the close of the second quarter 2013:
Brian Sozzi, the CEO and Chief Equities Strategist of Belus Capital Advisors noted that this isn’t Ackman’s first failed retail investment, Target being the other. Sozzi said, “Retail boards should be very scared if he comes a knockin’ as unlike Carl Icahn, Ackman is a value destroyer.”
This mass sell of Pershing Square’s entire holding comes two weeks after Ackman left J.C. Penney’s board as a result of a fight over the direction in which the company’s top management was going.
In a shareholder letter last week, Mr. Ackman told his fund's investors that J.C. Penney fit with several other "mistakes" in retail investments, and that he would consider selling the stake. "Clearly, retail has not been our strong suit, and this is duly noted," Mr. Ackman reported.
Citigroup has offered to sell the shares for $12.50 to $12.90 per share, according to The Wall Street Journal. This decrease in price would represent a discount of between 3.4% and 6.4% to J.C. Penney’s closing price.
J.C. Penney’s historical price, revenue and net income:
J.C. Penney has a market cap of $2.93 billion. Its shares are trading down about 2% in after hours at approximately $13.33 per share. The company is trading at a P/S ratio of 0.20 and a P/B ratio of 1.30.