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Ackman moves to wash hands of stake in Penney

William Ackman’s investment in J.C. Penney is valued at $522 million.

Reuters/File

William Ackman’s investment in J.C. Penney is valued at $522 million.

NEW YORK — Hedge fund manager William A. Ackman moved Monday to sell his roughly 18 percent stake in J.C. Penney, nearly two weeks after he resigned from the board amid an unusual public battle with his fellow directors.

Penney filed a prospectus with regulators giving notice that Ackman’s firm, Pershing Square Capital Management, plans to sell its 39.1 million shares. The company, which will not receive any proceeds from the sale, did not list an expected selling price.

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Shares in Penney closed at $13.35 on Monday, valuing the stake at about $522 million. Pershing first began buying stock in the retailer three years ago at an average price of about $21.06, about 37 percent higher than where it trades now.

A spokeswoman for Ackman declined to comment beyond the prospectus.

The stock sale came six days after the retailer announced its latest quarterly earnings. Under an agreement with Penney’s board, Ackman could not begin disposing his stake until then because he still possessed some material information about the company’s finances.

By selling his stake, Ackman will wash his hands of a drawn-out and ultimately disappointing investment in Penney. He first emerged as a big investor three years ago, believing that the retailer could be turned around with new management. To that end, he enlisted Ron Johnson, the architect of Apple Inc.‘s retail strategy.

But Johnson’s tenure proved to be disastrous, with numerous initiatives — eliminating discount sales, a pricey renovation of Penney’s stores — serving only to drive away existing customers while failing to bring in new ones. Earlier this year, the board fired Johnson and brought in his predecessor, Myron Ullman III, on an interim basis.

Earlier this summer, Ackman again grew anxious that Penney was on the wrong track, fretting about executive appointments by Ullman. He later publicly called for the replacement of chairman Thomas Engibous, with Allen Questrom, a former Penney chief. The two sides negotiated a truce: Ackman would step down, while Ronald Tysoe, a retail veteran, would join the board, with another new director to follow soon afterward.

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