William Ackman charges his investors rich fees for the privilege of parking their money at his Pershing Square Capital Management hedge funds. He made believers out of many, helping Ackman become a billionaire with over $12 billion under management. But for more than two years now Ackman has not lived up to his part of the bargain. …read more
Source: FULL ARTICLE at Forbes Latest
Filed under: JC Penney, Apple, Retail, Consumer Goods, Target
By ANNE D’INNOCENZIO
NEW YORK — J.C. Penney is hoping its former CEO can revive the retailer after a risky turnaround strategy backfired and led to massive losses and steep sales declines.
The company’s board of directors ousted CEO Ron Johnson after only 17 months on the job. The department store chain said late Monday, in a statement, that it has rehired Johnson’s predecessor, Mike Ullman, 66, who was CEO of J.C. Penney Co. (JCP) for seven years until November 2011.
The announcement comes as a growing chorus of critics including a former Penney CEO, Allen Questrom, called for Johnson’s resignation as they lost faith in an aggressive overhaul that included getting rid of most discounts in favor of everyday low prices and bringing in new brands.
The biggest blow came Friday from his strongest supporter, activist investor and board member, Bill Ackman, who had pushed the board in the summer of 2011 to hire Johnson to shake up the dowdy image of the retailer. Ackman, whose company Pershing Square Capital Management, is Penney’s biggest shareholder, reportedly told investors that Penney’s execution “has been something very close to a disaster.”
On Saturday, Ullman received a phone call from Penney’s chairman Thomas Engibous asking him to take back his old job, according to Penney spokeswoman Kate Coultas. The board met Monday and decided to fire Johnson.
Neither Johnson nor Ullman were available for an interview.
Until early last week, some analysts thought the board would give Johnson, a former Apple Inc. (AAPL) and Target Corp. (TGT) executive, until later this year to reverse the sales slide. A key element of Johnson’s strategy was opening new shops featuring hot brands to help turn around the business. They began opening last year and had been faring better than the rest of the store.
“I truly believed that he had until holiday 2013,” said Brian Sozzi, CEO and chief equities strategist Belus Capital Advisers. “Today’s announcement is an indictment of his strategy.”
Under Ullman, the chain brought in some new brands such as beauty company Sephora and exclusive names like MNG by Mango, a European clothing brand, but he didn’t do much to transform the store’s stodgy image or to attract new customers. He’s expected to serve mostly as a stabilizing force, not someone who will make changes that will completely turn the company around.
“What they need is a little bit of stability and essentially adult supervision,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy. “[Ullma]) did nip-and-tuck surgery. But this was a place that needed radical surgery,” Johnson said.
Sozzi said he …read more
Source: FULL ARTICLE at DailyFinance
By Selena Maranjian, The Motley Fool
Filed under: Investing
Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well known activist investor, famous for publicly airing his opinions about companies in which he invests, and not mincing words when he’s displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! CEO Scott Thompson’s biography – paving the way for Yahoo!’s new CEO, Marissa Mayer.
His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over 15 recent years, Loeb racked up a cumulative gain of 1,022%, compared with just 124% for the S&P 500.
The company’s reportable stock portfolio totaled $5.5 billion in value as of December 31, 2012.
Interesting developments
So what does Third Point‘s latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are News Corp. and Tesoro. Other new holdings of interest include AbbVie and Herbalife . AbbVie was split off from Abbott Labs, and contains the pharmaceutical business, while Abbott focuses on medical, diagnostic, and nutritional products. AbbVie is saddled with a lot of debt, but it sports about $18 billion in annual revenue, more than $6 billion in free cash flow, and gobs of cash. Bears don’t like its being very dependent on its blockbuster drug Humira, which generates half its revenue. It does have other drugs, though, and more in its pipeline – and a 4.1% dividend yield.
Herbalife , while having the support of Loeb and Carl Icahn, has some high-profile naysayers, such as David Einhorn of Greenlight Capital, and Bill Ackman of Pershing Square Capital Management. The company recently reported robust results, with revenue in 2012 rising 18% over year-earlier levels. It sports an attractive 3.2% dividend yield, but those worried about red flags raised by critics (such as concerns about its multi-level-marketing strategy) might want to wait for the dust to settle.
Among holdings in which Third Point increased its stake was ARIAD Pharmaceuticals , which received FDA approval for its leukemia drug Iclusig – though its initial sales have been weak, so far. (The drug seems to be nearing approval in Europe, though, which bodes well.) ARIAD‘s bone-tumor drug ridaforolimus was rejected in Europe, but it might still prove effective against other cancers. The company has been spending heavily on research and development, and it needs some more success from its pipeline, as it consumes a lot of cash.
Third Point reduced its stake in companies such as Hillshire Brands , which has been trading near a 52-week high. The company, the result of a split-up of Sara Lee, describes itself as “a leader in meat-centric food solutions for the retail and foodservice markets,” and encompasses brands such as …read more
Source: FULL ARTICLE at DailyFinance
By Reuters
Filed under: Company News, JC Penney
By Svea Herbst-Bayliss and Katya Wachtel
BOSTON/NEW YORK – Two institutional investors with William Ackman‘s $12 billion hedge fund plan to reach out to the manager to get more information about the firm’s big bet on ailing retailer JC Penney (JCP), whose stock has dropped 21 percent this year.
Officials with two state pension funds that, combined, oversee assets of more than $120 billion told Reuters they want Ackman to give them more information about Pershing Square Capital Management’s portfolio and to say more about the long-range plan for turning around JCPenney’s fashion lines.
The pension officials did not want to be identified because they had not yet set up their meetings with Ackman. The manager, whose fund is sitting on a roughly $500 million paper loss in JCPenney stock, declined to comment.
It’s not uncommon for pension managers and institutional investors to seek a private meeting with hedge fund managers, especially when a big bet or a portfolio is underperforming.
The move by two of Ackman’s investors is an indication that some investors are growing uneasy with Pershing Square‘s stake of 39 million shares in JC Penney, which the hedge fund began amassing in 2010.
“People are reading a lot about Bill Ackman these days and have questions, and while these kind of hedge funds can’t speak to everyone, keeping their very largest clients informed will have benefits,” said Don Steinbrugge, managing partner at investment consulting firm Agecroft Partners LLC, in Richmond, Virginia.
Pershing Square is up 3.6 percent for the year through February, compared with a 2.8 percent gain for the broader $2.6 trillion hedge fund industry.
The pension plan officials said they are also concerned about Ackman’s other very large and public bet -an estimated $1 billion short position in shares of nutritional supplement company Herbalife. Ackman is betting that Herbalife will be exposed as an unsustainable pyramid scheme and the stock will collapse. He currently has a $200 million gain on that bet.
Billionaire investor Carl Icahn has taken a large stake in Herbalife (HLF) and has engaged in a very public war of words with Ackman over the company.
Meanwhile, at least one prominent hedge fund manager is beginning to line up against Ackman on the short side on JC Penney. Reuters reported last week that York Capital and Morgan Stanley (MS) are shorting the debt of JC Penney, where Ackman sits on the board.
Earlier this week, market speculation that Ackman’s handpicked CEO Ron Johnson might be leaving briefly pushed JC Penney shares up 5 percent on Tuesday.
But not all investors are pushing for Ackman to talk more about JC Penney. Given the fund’s strong track record over the years and current gains, several investors said they are very happy with Ackman and his team.<br …read more
Source: FULL ARTICLE at DailyFinance
Filed under: U.S. Government
William Ackman and Pershing Square Capital Management have released another presentation backing Ackman’s claim that Herbalife Ltd. (NYSE: HLF) is indeed a pyramid scheme. This time Ackman compares Herbalife to Fortune Hi-Tech Marketing, a multilevel marketing company that has been charged by the Federal Trade Commission (FTC) with operating an illegal pyramid scheme and falsifying earnings.
The latest presentation from Ackman offers a side-by-side comparison between Fortune and Herbalife, which lifts bits of reports and findings about Fortune and attempts to demonstrate how these accusations apply to Herbalife. The presentation does not include a summary or narrative, and it is a little difficult to follow. Ackman includes documentation that he believes supports his view.
Yesterday a consumer group, the National Consumers League (NCL), sent a letter to the FTC requesting that the agency initiate an investigation into Herbalife, saying that Ackman’s claims suggest that “Herbalife’s business practices may run afoul of many of the ‘red flags’ of pyramid scheme activity in NCL‘s guide.”
A third intervention came in the form of a lawsuit filed by a New York attorney, who wants the federal court to prevent Bank of America Corp. (NYSE: BAC), J.P. Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) from providing $1.2 billion in financing for Herbalife. In a separate lawsuit, the attorney asks the court to force activist investor Carl Icahn to pay damages and divest his stake in Herbalife on the grounds that Icahn is aiding the alleged fraud. The attorney is a shareholder in the banks and claims they are breaching their fiduciary responsibility to him by not withdrawing the financing to Herbalife. The attorney also holds a short position in Herbalife.
More heat, but more light? Maybe, but the continuing pressure on the FTC works to Ackman’s advantage. If the FTC agrees to investigate Herbalife, the shorts are in line for a nice payday.
Ackman’s new presentation on Herbalife is available here.
Herbalife’s shares are trading down about 1.5% this morning, at $38.33 in a 52-week range of $24.24 to $73.00.
Filed under: 24/7 Wall St. Wire, Activist Investor, Food, Regulation Tagged: BAC, HLF, JPM, WFC
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Filed under: U.S. Government
In a press release this morning, the National Consumers League (NCL) called on the Federal Trade Commission (FTC) to “investigate recent allegations that the multi-level marketing company Herbalife [Ltd. (NYSE: HLF)] is, in actuality, a sophisticated pyramid scheme.” The NCL is seeking an examination both of the charges leveled against Herbalife by Pershing Square Capital Management and its chief, William Ackman, and Herbalife’s response to those charges.
In its letter to the FTC, the NCL notes:
Pershing Square‘s research suggests that Herbalife’s business practices may run afoul of many of the “red flags” of pyramid scheme activity in NCL‘s guide.
For its part, Herbalife responded to the NCL‘s letter in a statement to The Wall Street Journal:
We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife. If anything, it is Pershing Square that should be investigated by appropriate authorities. Its actions are motivated by a reckless $1 billion bet against the company based on knowingly false statements about Herbalife.
So far Carl Icahn has not weighed in, but don’t be surprised if the activist investor raises his stake in Herbalife again.
Ackman, as might have been expected, praised the NCL:
We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife. We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.
We’ve said before that Ackman’s goal here has got to be to force the FTC to launch an investigation into Herbalife. If that happens, his short bet against the company will pay off. The outcome of such an investigation would hardly matter.
Shares of Herbalife are down about 2% at $39.60 in a 52-week range of $24.24 to $73.00.
The NCL letter is available here.
Filed under: 24/7 Wall St. Wire, Activist Investor, Food, Law, Regulation, Shareholder Issues Tagged: HLF
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By mergermarket, Contributor by Michael Ballaban With Carl Icahn and Bill Ackman’s now epic bit of bickering on CNBC in the TV history books, I remain hopeful that some out there are still wondering who is right rather than who can shout the loudest. Ackman, CEO of hedge fund Pershing Square Capital Management, who holds a short position in Herbalife and has aggressively criticized the company, debated his position on Friday against Icahn, who has gone long on the stock.
Source: FULL ARTICLE at Forbes Latest
