Hedge fund billionaire Bill Ackman wishes he had shorted Macy's Inc. (M - Get Report) , J.C. Penney Co. (JCP - Get Report) and the entire department store sector.

"It is a very, very troubled sector," Ackman said in a wide-ranging interview with TheStreet. "Since my J.C. Penney experience what I should have done is short the entire sector. That would have been a smart move. It's not what we did."

Ackman's comments come after he moved in 2013 to exit a large activist position in J.C. Penney, an investment the insurgent manager had previously acknowledged was a mistake. Ackman's fund reportedly reported a loss in the hundreds of millions of dollars, but he exited before the department store chain's shares dropped even further.

Activists frequently target department store chains, partly based on the argument that they are undervalued and have a market capitalization less than the value of their real estate. In the first quarter of 2017, Starboard Value's Jeff Smith exited an unsuccessful campaign at Macy's, as the chain faced significant headwinds coming from the explosive growth of online shopping.

Ackman argued that Macy's has been unable to adapt to dramatic changes to the shopping marketplace over the past ten years, adding that its board may have become overconfident and complacent.

"When you think about Macy's and its market position ten years ago... it was very pleasant, and the world was changing around them, with Amazon and the development of the Internet around them," Ackman said. "No matter how dominant they feel, how strong they feel and how many dividends they paid in the previous years or how much the stock price is up over the past decade, these things get boards of directors and management confident and ultimately that leads to complacency."

Ackman, who at one time had been a director on J.C. Penney's board, acknowledged that he expects that some retailers will continue to be successful in the years to come, but that they may not be the same retailers that are doing well today. "Macy's inability to adapt to date is what has created the situation where the stock is down," he said.

Macy's share price is down roughly 46% year-to-date and traded recently at $19.04 a share.

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