Perishing Square Capital Management, the hedge fund founded by activist investor Bill Ackman, has announced that it will sell its entire 39 million-share stake in retailer J.C. Penney (NYSE:JCP). Pershing Square owns about 18% of the company's total common shares, worth about $500 million at current prices. Citigroup will be the book-runner for the transaction.
The price for the offering has yet to be disclosed, but some outlets are reporting that the expected price will be between $12.50 and $12.90. J.C. Penney closed today at $13.35. Since Oct. 8, 2010, when Pershing's stake was first disclosed, the stock has fallen 51%.
Ackman served as a member on the company's board of directors beginning in February 2011, and he hand-picked former Apple and Target executive Ron Johnson to be CEO the following November. Ackman left his position on the board last week, nearly five months after Johnson was ousted. Ackman's departure followed very public disagreements with other board members surrounding the direction of the struggling retailer and the search for Johnson's replacement.
The announcement of the sale of the shares comes less than a week after Ackman sent a letter to investors saying he has made "mistakes" on bets with retailers and even stating that Pershing's investment in J.C. Penney could be categorized as a "failure," according to a report in The New York Times.
J.C. Penney's stock has dipped to approximately $13.00 per share in after-hours trading.
Editor's note: A previous version of the article contained incorrect information on when Ron Johnson stepped down as CEO and mischaracterized the monetary value of Pershing Square's investment in JCP.