Bill Ackman Puts $1 Billion into Lowe’s. I am Out!

Lowe’s has always been an interesting company to me. I’ve been in the stock many times over the last 25 years. Prior to the financial crisis in 2008, it actually traded at a premium to Home Depot and was growing faster (something which is probably more attributable to Bob Nardelli and the incompetent management at the time at HD). However, ithas tremendously underperformed HD since the crisis. It is almost safe to say Home Depot has won their market segment, just as Costco has won theirs and Amazon has theirs.

Even though Lowe’s is still not a cheap stock, whenever it has had good news, I’ve looked at it as an investment. The good news came yesterday when they added JC Penney CEO Marvin Ellison as their CEO. Ellison had been at Home Depot prior to joining Penney and was largely credited with much of the success Home Depot has seen over the last decade.

But, the bad news came today with news that Bill Ackman has put $1 billion into Lowe’s. Ackman, of course, is a well-known hedge fund manager, who has managed to produce an absolutely dreadful record with down years in 2016 and 2017 due to crazy positions in Valeant and against Herbalife. His last retail investment resulted in the destruction of the aforementioned JC Penney. He actually appeared on CNBC, after selling that position, and vowed never to invest in retail again.

In January, DE Shaw, a reputable manager, got heavily into Lowe’s and began agitating for management change. Over the next two months the stock fell from 108 to 81.

I would not expect better results from Ackman.

Out at 95!