Ackman Takes Roughly $1 Billion Stake in Lowe's -- 2nd Update
May 23 2018 - 3:00PM
Dow Jones News
By Cara Lombardo
William Ackman's Pershing Square Capital Management LP is
joining another activist investor in Lowe's Cos., hoping to profit
as the retailer tries to make improvements under a new chief
executive.
Pershing Square has built a stake in the home-improvement chain
valued at roughly $1 billion as of Tuesday's close in what is
expected to be a friendly investment, according to people familiar
with the matter. Lowe's had a market value of roughly $77.7 billion
on Wednesday afternoon.
Mr. Ackman revealed the position at a conference in New York on
Wednesday, said the people, who were in attendance. He built it
over the past 45 days, they said.
The people said Mr. Ackman supports Lowe's incoming Chief
Executive Marvin Ellison, who during 12 years at Home Depot Inc.
was credited with improving customer service and e-commerce and
expanding its professional business. On Tuesday, it was announced
that Mr. Ellison would leave his position as CEO at struggling
retailer J.C. Penney Co. to take the top job at Lowe's, where he is
expected to draw from the same playbook he used at Home Depot.
Lowe's CEO Robert Niblock said in March he would retire, a week
after three new directors joined the board as part of an agreement
with activist investor D.E. Shaw & Co., which owns about a 1%
stake.
Home Depot's same-store sales growth has outpaced that of Lowe's
over the past several years. Lowe's stock had also sharply lagged
behind that of Home Depot over the past year, before a 9.8% gain
Wednesday following upbeat guidance that put the two retailers'
performance more in line.
A Lowe's spokesman said the company is aware of reports of
Pershing Square's stake and it is committed to creating value for
all shareholders.
Mr. Ackman agrees with D.E. Shaw's view that Lowe's is lagging
Home Depot and could do more to capitalize on an improving
real-estate market, the people said. The stake would put two
activists in the top 16 holders in the company, according to the
people.
Mr. Ackman has pledged to remain out of the headlines after a
rough stretch of performance shrunk his fund. He has recently taken
several new positions where he has said he supported management and
avoided detailed complaints, including a quick trade in Nike Inc.
and an investment in United Technologies Corp., though he has
called for a breakup of the industrial conglomerate.
Pershing Square's publicly traded fund turned slightly positive
for the year this month, according to disclosures, as some of his
investments have started gaining again.
Pershing Square previously held Lowe's shares in 2011, when
filings showed about a 1.7% stake soon after Mr. Ackman outlined a
bullish investment thesis on the retailer. He sold the shares by
the end of the year after the stock price rose.
Mr. Ackman's new stake in Lowe's makes for an unusual union with
Mr. Ellison, who helped stanch the bleeding at J.C. Penney in 2014
after Ron Johnson, a CEO Mr. Ackman had recruited, upended Penney's
pricing strategy and offerings to disastrous results.
Around the time Pershing Square exited J.C. Penney at a steep
loss, Mr. Ackman expressed contrition to his investors following a
few mistakes in the retail world, which also included a loss in
Target Corp.
"Clearly, retail has not been our strong suit, and this is duly
noted," he wrote in 2013.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
May 23, 2018 14:45 ET (18:45 GMT)
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