Aug 13 - Activist shareholder Bill Ackman resigned from J.C. Penney's board after a bitter fight with the company. Now a cloud looms over its shares. Fred Katayama reports.
Another black eye for Bill Ackman. The activist investor resigned from the board of J.C. Penney. This follows a nasty public fight with fellow board directors and outside criticism and barbs from the likes of Starbucks CEO Howard Schultz and activist Dan Loeb. Ackman had publicly demanded last week that chairman Thomas Engibous and CEO Myron Ullman get the boot, but he got neither. The board said again today it's backing both of them. And it's adding former Federated Department Stores vice chairman Ronald Tysoe to the board. Ackman's reputation had already taken a blow when the CEO he had handpicked, Ron Johnson, failed to turn the retailer around after a massive overhaul and was replaced by Ullman. And his bet against Herbalife has been a big money loser so far. Penney shares reacted positively to the news. But they're down 33 percent this year. And now, a cloud hangs over them. Investors wonder what Ackman, Penney's largest shareholder, will do with his nearly 18 percent stake as well as that of his ally, hedge fund Perry Capital. Ackman told CNBC: "If I wanted to sell JCP shares, I could have sold in the quarterly window." He would take a big loss if he were to sell now. He bought the stock at an average price of $25. It's now trading at around 13. The latest development in this saga couldn't come fast enough for Penney. It's a crucial time for retailers, with back-to-school starting and the holiday season around the bend.