The competition in the retail sector was also grossly underestimated.
Most egregious was Eddie Lampert, with absolutely no retail experience, appointing himself as head of Sears. In that capacity, he was selected "Worst CEO of the Year" in 2007. If nothing else, Lampert's performance at Sears has been consistent, as Sydney Finklestein of Dartmouth's Tuck School of Business selected both him and Ron Johnson, the former CEO of J.C. Penney, as two of the worst CEOs for 2013.
Bill Ackman, founder of Pershing Square Capital Management, sold out of J.C. Penney in August 2013 at a loss of about $473 million.
Ackman realized how badly he miscalculated. It would seem that the other shareholders of Sears, J.C. Penney and Bon-Ton Stores would realize just what was overestimated and just what was underestimated and follow Ackman in selling.
At the time of publication, the author held no positions in any of the stocks mentioned.
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