Sun, Aug 28, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Ackman shops for JC Penny and Fortune profits

Monday, October 11, 2010
Opalesque Industry Update: Billionaire and activist investor William Ackman of Pershing Square Capital Management is in the mood for shopping for profit.

Various media reports over the weekend indicated that Ackman is betting huge on consumers, particularly JC Penney and Fortune Brands Inc., making him the largest investor in both companies.

News that Ackman snapped up 39 million shares ($900m) of JC Penney saw shares of the department store chain rally on Friday, reported the New York Post. The move made Ackman the biggest single shareholder in the retail store with at least a 17% stake.

Also last week, real-estate mogul Steven Roth of Vornado Realty Trust, revealed that his firm had also upped its stakes in JC Penny, and said that it had discussed plans for the retailer with Ackman.

These talks were confirmed by Pershing Square in its filing with the SEC, which said the two sides “intend to consult with each other in connection with their respective investments in the common stock.” Although it clarified that Ackman’s firm has no control over Vornado’s stake, according to a Bloomberg report.

Ackman is known to buy firms that he sees as undervalued, particularly focusing on the retail, restaurant and real estate industries. Previously, he launched an unsuccessful bid to convince investors of Target Corp. maximize value by proposing to spin-off underlying real-estate assets into a separate company.

According to the New York Post, speculations are ripe that Ackman and Vornado would try to plot a similar scheme with JC Penney.

Leah Hartman, senior vice president and retail analyst at CRT Capital Group LLC, in Stamford, Connecticut told Bloomberg, “There is a lot of real estate and historically he’s been a real estate-focused activist. It certainly is a company that we see value in.”

Fortune Brands too
Also last Friday, Pershing Square confirmed it bought an 11% stake in Fortune Brands, maker of Jim Beam whiskey, Moen faucets and Titleist golf club. Ackman said he believes Fortune shares were undervalued and he intends to discuss the issue with the firm’s board and other shareholders.

Industry observers say Ackman’s latest move is a reflection of the activist investor’s confidence in the U.S. economy, especially in the housing market. Sales in Fortune’s household and hardware business are indication of the health of the U.S. housing market industry, said the Wall Street Journal.

The report added that industry watchers have long been eyeing Fortune for a possible break-up, with the golf, spirits and household businesses spun off or sold. Fortune’s spirits unit is a potential target for alcohol companies, and the firm will likely use the money to be raised in the break up to shore up its profits.

The Journal also said the slump in the U.S. housing sector has hurt Fortune’s home products division, which manufactures faucets and cabinets. However, that unit has recently introduced cost cutting measures and has seen profits rise again. It also benefited from the improving housing market sector from the U.S. homebuyer tax credit. The spirits business has shown more resilience during the financial crisis.

As with JC Penny, shares of Fortune Brands Inc., jumped nearly 8% on Friday after news that Ackman , raised his stakes in the firm.

Fortune’s shares rose $4.04, or 7.8%, to $56.04 during midday trading. The stock has traded between $37.05 and $58.92 during the past 52 weeks. In July, the company reported that its 2Q profits more than doubled because of rising revenue and decline in costs.
- Precy Dumlao
PD

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Strategies - The 'Holy Grail' hedge fund strategy to handle a black swan the size of World War I, Hedge funds get more pushback on terms as enthusiasm for strategy wanes[more]

    The 'Holy Grail' hedge fund strategy to handle a black swan the size of World War I From IBTImes.co.uk: To illustrate a strategic gap common to today's portfolio managers, George Sokoloff, PhD, founder and CIO at Carmot Capital, proposes an interesting thought experiment – a breakdown of

  2. Institutional investors - Investors set to increase allocation to private debt, With investment income key, Richmond retirement system faces funding challenges[more]

    Investors set to increase allocation to private debt Investors are set to increase their allocation to private debt, with 60% revealing they believe the private debt market will grow over the next 12 months, according to a new study by Elian, a leading funds services provider. 41%

  3. Investing - Hedge funds snap up banks, unload Apple, Some of hedge funds' favorite stocks are finally starting to beat the market, Einhorn's Greenlight shifts positions, Treasury yield climbs to two-month high as Fischer joins hawks, 9 stocks smart investors put their money in last quarter[more]

    Hedge funds snap up banks, unload Apple From Barrons.com: Prominent hedge funds have a newfound love of big banks, and some have a distaste for shares of Apple, regulatory filings released last week show. The filings suggest that the funds have been pivoting their portfolios in recent mon

  4. Chesapeake energy seeks $1 billion loan to refinance debt[more]

    From Bloomberg.com: Chesapeake Energy Corp. is seeking a $1 billion loan as the company battered by cratering fuel prices and credit downgrades takes a step to address its $9 billion debt load. The natural gas producer hired Goldman Sachs Group Inc., Citigroup Inc. and Mitsubishi UFJ Financial Group

  5. Institutions - Nordic pension funds magnify focus on unlisted and direct investing, building up teams[more]

    From IPE.com: As bond yields remain at low or negative levels, pension funds and other institutional investors in the Nordic region are stepping up efforts to find higher returns by adding more unlisted investments to portfolios and are expanding in-house teams in order to do this, according to new