JCPenney to Allow Ackman to Sell a Majority Stake

In Industry News, Reports, What's New by Jeff PrineLeave a Comment

JCPenneyPlano, TX—William Ackman, the activist board member at JCPenney whose Pershing Square Capital hedge fund is the retailer’s largest shareholder, may soon no longer be the largest shareholder.

Ackman evidently settled with JCPenney’s board when he resigned from it earlier this week after a very public battle over who will steer JCPenney ahead as its tries to recoup its business.

In a filing with the Securities & Exchange Commission (SEC), JCPenney and Ackman agreed that Pershing would be allowed to make up to four large sales, each one more than 5 million shares and with the permission of JCPenney. Pershing owns about 18% of JCPenney, about 39 million shares.

Since Ackman was a board director and had confidential information about the company, Pershing is restricted from selling stock immediately after his resignation. So far, Ackman hasn’t said whether he plans to sell Pershing’s shares but if that’s the case, his hedge fund could stand to lose more than $300 million of its investment.

Meanwhile, two of JCPenney’s top 15 shareholders liquidated their shares in the second quarter: Hotchkis & Wiley, which had owned 10.1 million shares, and Tiger Global Management, which held 5.3 million shares, according to SEC records.

But Geroge Soros, the billionaire investor/philanthropist, upped his shares by 2 million to 19.98 million shares.

JCPenney is scheduled to release its second quarter results on August 20. Ahead of that announcement, analysts forecast that the department store’s loss will widen to $1.27 a share from 67 cents a year ago. Sales may be down 8% to $2.78 million.