In a letter sent Tuesday to shareholders in his activist investing firm, Pershing Square Capital Management, Ackman said he might sell his stake in J.C. Penney Co. Inc. and acknowledged a series of mistakes while investing in retail.
But he also vigorously defended his track record, offered nuanced explanations of his missteps and gave no ground to his detractors.
In short, even after a series of setbacks, William Ackman remains William Ackman — and he isn’t going anywhere.
“We are going to make mistakes,” Ackman wrote. “Because we manage a large pool of capital and we make active investments in large capitalization, high-profile companies, our mistakes are often going to be much more visible than those of other investment professionals.”
While noting the activist investor needs “thick and calloused skin,” Ackman said his company’s high profile would “continue to be a sustainable competitive advantage.”
The investor has been sorely criticized for his role at Penney’s, where he took a stake in 2010 and later helped install Ron Johnson as chief executive officer. Johnson’s effort to transform the firm into a series of shops-in-shop led to a 25 percent sales decline and a $1 billion loss from which the company is still struggling to recover.
Ackman described the Penney’s investment as a failure and said the stock is down more than 40 percent versus his cost to build the stake. He also noted investments in Borders Group and Target Corp. were failures. “Clearly, retail has not been our strong suit, and this is duly noted,” he said.
Ackman said Penney’s was “a higher-risk, higher-potential-reward investment.” He also noted his vocal support for Johnson “caused the media to conclude erroneously that we were controlling the decision making at the company despite the fact that we had only one seat on J.C. Penney’s 11-person board. All of the board’s decisions with respect to replacing Mike Ullman and hiring Ron were unanimous.”
Myron “Mike” Ullman 3rd was brought back in as ceo in April to stabilize the company, but the search for a new leader to take the reins on a more permanent basis was slower to start than Ackman expected.
“Mike settled in as a longer-term ceo and began to make a series of material changes in personnel and operations that were not consistent with the actions of a typical interim ceo,” the investor said. “We also began to have concerns about capital investment plans, cost control, inventory management and the business-planning process.”
Ackman aired his views publicly, sparking a board battle that ultimately saw him step down as a director of Penney’s this month. “Sharing our concerns publicly has the benefit of focusing all constituents inside and outside the company on these issues,” he said.
Penney’s stock could rise substantially from current levels, Ackman said, noting it was hard to tell how long the recovery would take.
“We may choose to exit J.C. Penney after more or less time depending on developments at the company, the stock price and the availability of other investment opportunities,” he said.
Pershing Square held Target’s stock for more than 19 months after he failed to remake the board in a proxy battle.
Procter & Gamble Co. is also on the investor’s radar. Ackman pushed to oust Bob McDonald, former ceo, who ultimately stepped down and was replaced by his predecessor, A.G. Lafley.
“Lafley will enhance organic growth, accelerate P&G’s existing cost-cutting program, increase innovation, implement a succession plan and improve employee morale significantly,” Ackman said. “With a meaningful portion of his net worth invested in P&G stock and options, and a legacy as one of America’s greatest chief executives on the line, Lafley is incredibly motivated to turn around P&G in a timely fashion.”
Pershing Square sold a portion of its stake in P&G for “portfolio management reasons,” but still has 5.3 percent of its funds invested in the company.
Ackman said 16 of the 19 companies Pershing Square has invested in have been successful, while four of the five of the firm’s short positions have panned out. He put the controversial Herbalife investment in the undecided column.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)