Activist investor William Ackman discloses 17 percent stake in J.C. Penney

Friday, October 8, 2010

Investor Ackman takes big stake in J.C. Penney

Activist investor William Ackman on Friday has taken big stakes in department store chain J.C. Penney Co. and Fortune Brands Inc., which owns brands such as Jim Beam bourbon and Titleist golf equiment.

Ackman, who has agitated for major changes at retailers he holds stakes in, such as Borders Group Inc. and Target Corp., and his hedge fun Pershing Square Management disclosed a nearly 17 percent stake in J.C. Penney. Penney shares rose more than 5 percent.

It was a busy day for Ackman, who also on Friday became chairman of a spinoff of real estate investment company General Growth Properties Inc. called The Howard Hughes Corp. It will consist of General Growth’s portfolio of planned communities and other real estate assets.

Ackman also took an 11 percent stake in Fortune Brands among other brands. Shares rose $3.82, or 7.4 percent, to $55.78 after hitting a 52-week high of $59.40.

Pershing Square owns about 39.1 million shares of J.C. Penney stock, according to a filing with the SEC.

In the filing, Ackman says J.C. Penney’s stock is undervalued and he plans to discuss “business, assets, capitalization, financial condition, operations, governance, management, strategy and future plans,” with the company, based in Plano, Texas.

Ackman lost a contentious proxy fight with Target last year after he failed to install new board members, including himself, at the company. He subsequently reduced his stake in the discount store operator.

Outside of retail, Ackman has expressed interest in a massive New York housing complex, Peter Cooper Village and Stuyvesant Town, and invested in mall operator General Growth.

J.C. Penney has cut inventory and introduced more exclusive store-label brands in an effort to offset consumer spending dampened by the uncertain economy and high unemployment.

In August it reported it returned to a profit in the second quarter, but had nearly flat revenue and cut its profit outlook for the rest of the year.

Still, on Thursday the company reported a key revenue figure rose more than expected in September, fueled by back-to-school purchases.

Its share price is up about 19 percent since the beginning of the year, but is about 15 percent below its 52-week high of $37.21 nearly a year ago on Oct. 15, 2009.

J.C. Penney shares rose $1.81, or 5.7 percent, to $33.45 during midday trading. The stock has traded between $19.42 and $37.21 during the past year.

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