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Noted Activist Investor Sets Sights on Retail Giant JC Penney

Friday, 8 Oct 2010 | 11:39 AM ET

Bill Ackman, the noted activist investor with a noticeably mixed track record when it comes to investing in retail, is at it again.

His latest assault is on JC Penney and it is in conjunction with Vornado Realty Trust.

Ackman’s funds have acquired 39 million shares of Penney through both purchases of common stock (the firm bought $130 million worth Tuesday) and through long dated call options. It’s enough for a 16.5 percent position in the retailer.

The stock, already up from $20 a share on August 17 when Ackman first began buying is now above $33.

Vornado will also file its own 13D—a form that must be filed with the SEC when a person or group acquires more than 5 percent of any class of a company's shares—but it’s unclear whether that will simply restate Ackman’s intentions and announce the firm as his partner or include an additional stake of shares in the company.

Vornado is no stranger to retail. It is a part owner of Toys "R" Us and had previously owned shares of Sears. But it’s presence in such situations usually points to value in the company’s underlying real estate and a frequently-stated goal in such situations of somehow splitting off the target company’s real estate from its retail operations.

Faber Report: Pershing Square/JC Penney
CNBC's David Faber has the details on Pershing Square reporting a 16.5% stake in JC Penney.

Ackman’s track record is retail investing has not been a resounding success. His largest single investment was in Target through a special purpose vehicle that, while it has rebounded sharply, is far from his best investment.

People who have worked against Ackman tell me they imagine he has already spoken with Penney’s management and so they were not taken unaware by today’s filing.

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