Hedge fund manager William Ackman of Pershing Square Capital Management smiles during an interview in New York September 27, 2010.SHANNON STAPLETON
Hedge fund manager William Ackman is placing a big bet that the U.S. consumer will start spending more money by taking large stakes in shares of retailer JC Penney and consumer goods manufacturer Fortune Brands Inc .
Mr. Ackman's New York-based firm Pershing Square Capital, known for big investments in retailers like Target and shopping mall operator General Growth Properties, said it now owns roughly 39 million shares of common stock in JC Penney, according to a regulatory filing.
Meanwhile, a person familiar with Pershing Square confirmed a CNBC report that the $7-billion (U.S.) hedge fund has taken an 11 per cent stake in Fortune Brands , which owns brands like Jim Beam whiskey and Titleist golf balls.
The New York-based hedge fund may formally unveil its position in Fortune Brands in a regulatory filing later today.
In recent years, Mr. Ackman has emerged as one of the hedge fund industry's most successful so-called activist managers who often agitate for structural changes at companies that are underperforming their competitors.
In moving into JC Penney and Fortune Brands it would appear Mr. Ackman is targeting stocks he sees as undervalued and able to benefit from an economic recovery.
In a regulatory filing, Pershing Square said it expects to speak with JC Penney's management, the board and other stockholders about the company's business, assets, and financial conditions.
Mr. Ackman, who has a penchant for going after companies that own lots of real estate, has ventured into so-called Big Box retail shops before. Only last year, Mr. Ackman lost a bitter and expensive fight to join Target's board after he failed to convince management to adopt his real estate plan.
JC Penney shares climbed 4.6 per cent to $33.10 in morning trading in New York, having surged 60 per cent in the last month, while rival Target was flat and Kohl's Corp rose 2 per cent.
JC Penney could not immediately be reached for comment.
In the filing, Mr. Ackman said the firm began building the JC Penney stake in mid-August, took a break in early September and then resumed buying at the end of the month before finishing on Thursday. Most of those shares were accumulated when the retailer's stock was selling around $20.
Pershing Square also entered into over-the-counter derivatives contracts known as total return swaps which are linked to the performance of an additional 602,600 common shares. Swaps were purchased from Credit Suisse and Societe Generale, but not Goldman Sachs, the firm Pershing Squares uses as its prime broker.