Retailer JC Penney should be trading “meaningfully higher” than where it is now, according to activist investor William Ackman, CEO of Pershing Square Capital and a newly-appointed JC Penney board member.
Pershing Square is one of JC Penney’s largest shareholders and Ackman said the retailer’s low valuation is why his firm got involved.
“The margins are lower than where they could be, I think the revenues are lower than where they could be, and I think the business has an opportunity. It’s got a very strong balance sheet and it’s got a very strong position in the minds of consumers.”
When asked, Ackman would not say what he thought a fair valuation would be for JC Penney right now.
“We rarely buy something at $20, say it’s worth $40 and the day it turns $40 we sell,” he explained. “Businesses are dynamic and hopefully they’re making changes to make it more valuable over time. Our favorite investment is one where the business value grows at a rate where we don’t need to sell.”