Ackman Says He Will Be Patient on J.C. Penney Turnaround

Pershing Square Capital Management LP’s William Ackman, the activist hedge fund manager, said he’s willing to be patient as J.C. Penney Co. pursues a turnaround.

“It takes time to get new product,” Ackman said today on CNBC’s “Squawk Box” program. “The question is how quickly is the customer going to understand the new pricing and the promotion? That will take some time.”

J.C. Penney, the U.S. department store chain run by Ronald Johnson, the former retail chief of Apple Inc., posted a fourth- quarter loss last month on charges to revamp the company. Johnson, who took over as chief executive officer in November, is overhauling the Plano, Texas-based retailer’s pricing and store design to revive sales and lure shoppers from Macy’s Inc. and Target Corp.

Ackman, the chain’s largest shareholder, said he expects the U.S. economy to “outperform expectations” should unemployment stabilize, with housing and low home prices possibly driving a recovery.

Fannie, Freddie

Ackman said Fannie Mae and Freddie Mac, the mortgage giants that required a taxpayer bailout, should become real estate investment trusts and stop selling foreclosed homes. Instead, they should fix up those assets and rent them, he said. Ackman said Pershing Square sold its shares of Lowe’s Cos. (LOW), the second- largest U.S. home-improvement retailer, when the hedge fund needed cash to buy shares of Canadian Pacific Railway Ltd. (CP) Ackman’s New York-based firm is the biggest shareholder of the Calgary-based company.

Ackman also said he likes the fast-food industry. McDonald’s Corp. (MCD), the world’s largest restaurant chain, said sales at stores open at least 13 months rose 7.5 percent globally last month, trailing analysts’ estimates for the first time since August, as consumers cut spending in Europe.

“I like a business when you charge a royalty on other people’s sales,” said Ackman, who doesn’t own shares of the Oak Brook, Illinois-based company. “Every time they sell a Coke, McDonald’s makes 14 cents.”

Ackman called his investment in Borders Group Inc. the “worst” he’s made. Pershing Square owned 31 percent of the bookseller’s shares when it filed for bankruptcy last year.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net