J.C. Penney shares are down more than 50% since Ackman got involved.
Ackman has been shorting 20 million shares of Herbalife all year, calling the diet shake seller a pyramid scheme that will be shut down by regulators, but the stock has soared by more than 100% this year and caused big problems for Pershing Square’s hedge fund, a trend that was made worse by the disclosure of the Soros investment.
Ackman apologized to his investors in 2009 when their Target investment lost 90 percent of its value.
Defended Erza whom was part of the Madoff scandal.
If being a billionaire is sucking at life someone sign me up!
Pershing Square has done well over time, that’s why he’s a billionaire. There are pros and cons to being an activist running a concentrated book with a very public profile. He needs to be high profile to make his business model work – that’s how he raises money and has influence as an activist. But if / when he misses, it looks horrible.
I personally think he’s needs to read about this guy named Lampert and stop wasting time with big box retail. Big box is one of THE worst places to be over time as an investor. The industry is in structural decline and the economics are lousy. It’s pretty hard to believe that JCP was the best activist target he could find – Ackman lost his G-D mind on that one. JCP is an inevitable long-term zero, it is just a question of timing (it may take years but that’s where it’s going).
HLF I am less familiar with but seems to violate the rule of “Don’t short companies that produce a lot of free cash flow on the premise that the SEC is going to get a clue (IF HLF is even actually a fraud).” There are much better places to be on the short side. Ackman should know this.
Even after the JPC trainwreck and having somewhere between $250mm and 1b wrapped up in the HLF short…
Yea, he is trailing the market considerably. But people don’t give him money to make market returns…they want to double their money over a 5 year period.
I never liked JC Penny as a long. I thought that would have been a great short and was right. I mean thinking that bringing the apple store guy was gonna change the fact that nobody wants their products was retarded.
I don’t know about that. It might not be easy to stomach, but hiring a kid with a powerful dad will likely provide more benefits to the company than a former tennis pro…all else equal. We may not like to see spoiled kids getting everything handed to them, but there’s a reason it happens.
Yeah, I think the apt comparison is JC Penney vs. Macy’s. Macy’s is successful because it offers brands like Kenneth Cole, Calvin Klein, INC, etc. Rearranging the stores will not help much - the products are more important. People will rush into a crowded, piece of shit store if they think they can get name brand products cheaply.
Is JCP more comparable to Macy’s or KSS? We shorted JCP and watched it get completely blown out from the mid-30s. The problem with JCP is that the business was in secular decline in an industry with overcapacity where JCP was losing share to AMZN, KSS, TGT, WMT, M and specialty retailers. They were boxed in with nowhere to go. Basically JCP had cancer. Then Ackman showed up and gave them AIDS. Getting AIDS is not a great turnaround strategy.
I mean when was the last time anybody bought something from a department store? A fur coat or an engagement ring maybe. But what millenial has enough money to afford such things. Even if they could would they buy them? Nah.
Well, I have to frequent the mall quite frequently, so here is how the mid-to-low end department stores are doing:
In the regular mall -
Sears is dying. Service is good but that is probably exception to the rule. Products are just not that great.
Macy’s is doing great, but discounting a hell of a whole lot. Prices comparable to KSS (Kohl’s.)
JCP blows monkey chunks. Dirty, faded merchandise, surly sales people who look like “People of Wal-Mart.”
In the strip mall -
Wal-Mart is doing well. Firing that Target guy was the right thing to do. Obviously all that Wal-Mart is good for is cheap crap that you don’t care if your kids break. If you buy it at Wal-Mart, trust me, there is something wrong with it. They squeeze their suppliers beyond reason and it shows up in the quality. Always.
Kohl’s is doing alright. Marking everything up and then giving 10% discounts for using their card on top of 30% printed coupons seems to be working. Prices comparable to Macy’s (after all the discounts), quality a notch lower.
Ross “Dress Depressed” is doing whatever it is that they do. As is T J Maxx. I don’t really know. I never find anything I want at that particular moment in either of these. But I do find great bargains for shit I don’t want but could be useful one day.
K-Mart is the pits. It’s the homeless drunk of the retail stores.
CostCo is doing fabulous. High-quality merchandise, not cheap for the quantity they make you buy, but if you don’t mind using the same shampoo for a year or carrying 45 pounds of water up your front steps, then you can’t beat their combo of price and quality. Kirkland (their home brand I believe) is a stark contrast in quality to Wal-Mart’s Great Value brand.