Bill Ackman, the billionaire stock player of the moment went bust on JC Penney and sold his shares for a $500 million loss this week. Citigroup Inc. managed the 39.1 million shares of the Plano, Texas-based department-store chain at a price of $12.90 apiece—a sale that ends a saga in which Ackman handpicked CEO Ron Johnson’s plan to turn the chain’s stores into collections of boutiques alienated customers, leading to the worst annual sales in more than two decades. It also follows Ackman’s agreement earlier this month to quit J.C. Penney’s board after a public clash over its direction and management succession.
But retail isn't the only place where Ackman is taking a bath; he's taking a paper loss on his short bet on Herbalife Ltd., which he has accused of being a pyramid scheme. The company has repeatedly denied the accusation and shares have almost doubled in value this year.
Most famously, in our industry, Ackman's high-stakes antics cost former P&G boss Bob McDonald his job. Most recently, Pershing Square rebalanced its ownership of P&G in the second quarter, selling off nearly 70% of the shares it owned, but buying $2 billion worth of call options on the company.
Now, Ackman has turned his attention on Air Products. He acquired over 10 million shares of the company for his primary fund Pershing Square. He also bought shares of the company in a special purpose vehicle, raising additional funds to push for change. Air Product's management caught on to Ackman's activities, and adopted a poison pill back in July. If any single shareholder were to acquire more than 10% of the company, existing shareholders would be granted the right to purchase more shares—thereby diluting Ackman's stake. Consequently, Ackman stopped just short of the 10% threshold.
With all the scheming, it’s been a tough year for Ackman. His $11.2 billion Pershing Square hedge fund is trailing many of its biggest rivals this year with a 3.7% return through July.