With his departure from the J.C. Penney board, William A. Ackman has another big whiff on his hands.
While Mr. Ackman, the head of Pershing Square Capital Management, is one of the most recognizable hedge fund managers in the world, he has had his fair share of duds. His career has been largely one of big swings and misses: for every home run investment like General Growth Properties and Fortune Brands there has been a strikeout like the Target Corporation.
Penney has proved to be one of Mr. Ackman’s bigger headaches. Having first bought up a big position in 2010, he became a big advocate for change. The biggest was bringing in Ron Johnson, who was celebrated as the head of Apple’s retail operations. But as the new chief executive, Mr. Johnson proved to be a disaster, unveiling sweeping changes that drove away customers.
Mr. Johnson was fired this year and replaced with the man whose job he had taken, Myron E. Ullman III. But Mr. Ackman began to feud with the old-new chief executive as well, including over a series of management changes.
Here are some of Mr. Ackman’s other notable missteps, many of which happen to be other retail companies:
Gotham Partners: Mr. Ackman’s first foray into professional investing came right out of Harvard, when he partnered with a classmate with just $3 million to start. The hedge fund, Gotham Partners, became a celebrated investor whose assets swelled to several hundred million dollars.
But a series of investments, notably an ill-fated golf company, began to sour, leading investors to withdraw money from Gotham. In 2003, the firm became the subject of an investigation by Eliot L. Spitzer, then New York’s attorney general, although he ultimately found no wrongdoing.
Still, Mr. Ackman was forced to wind down the firm. In 2004, he founded Pershing Square.
Target: Mr. Ackman took aim at the low-cost retailer, pushing it to try a number of moves aimed at raising value for shareholders. Among his suggestions were selling off its credit card receivables and instituting a stock buyback program.
So sure was his bet that he created a special investment fund dedicated to Target, and so ardent was his campaign that he spent millions of dollars in a lengthy proxy fight in 2009. But he lost, leading to a sometimes teary concession speech that quoted Martin Luther King Jr. and President John F. Kennedy in its defense of shareholder democracy.
Perhaps more important to his investors, Mr. Ackman apologized after having lost about 90 percent of the Target fund’s capital
The Borders Group: Pershing Square made a bold wager on the troubled bookseller, amassing a 17 percent stake in the company by late 2007.
But the main strategy Mr. Ackman articulated, a merger with the much larger Barnes & Noble, did not come to fruition. Borders filed for bankruptcy in late 2010 and later liquidated, saddling Pershing Square with a loss of at least $125 million.
Herbalife: Perhaps Mr. Ackman’s most notable current investment outside of J.C. Penney, the nutritional supplement maker Herbalife is among his most controversial. He took aim at Herbalife in late 2012, accusing the company of being an illegal pyramid scheme and betting $1 billion that its stock would fall to zero.
Herbalife has steadfastly denied Mr. Ackman’s charges and mounted a vocal defense of its business practices. But the company’s biggest allies happen to be its enemy’s foes, notably the septuagenarian activist investor Carl C. Icahn, who has had a long-running feud with his younger counterpart. Their goal has been simple: hurt Mr. Ackman’s bet by getting Herbalife’s stock to rise.
Mr. Icahn began with the equivalent of a schoolyard spat with his opponent, one televised on CNBC with millions of dollars at stake. He then announced a big stake in Herbalife - now about 16.5 percent of the company’s shares - and gained two seats on its board.
Other investors, including Mr. Ackman’s friend Daniel S. Loeb and the hedge fund founded by George Soros, also piled in. To date, Herbalife’s shares have risen more than 76 percent since the official debut of Mr. Ackman’s bet against the company.
