Hedge fund manager Bill Ackman is finally selling his stake in J.C. Penney (NYSE: JCP) after a turbulent couple of weeks. Ackman, the head of Pershing Square Capital Management, resigned from the board after a public battle with the Company’s leadership. Ackman holds an approximate 18 percent in the Company, owning around 39.1 million shares. Ackman’s activist attempts to turn J.C. Penney around will likely result in a substantial loss for Pershing Square.

J.C. Penny is currently trading at $13.72, thus giving the shares an approximate market value of $536 million. Ackman began buying the stock around three years ago. It is believed that his average price per share is around $25. If the shares are sold at recent prices, Pershing Square faces a possible loss in excess of $400 million. Ackman was prevented from exiting his position until the release of 2nd quarter earnings, since he continued to have material information regarding the performance of the Company. J.C. Penney’s quarterly earnings were once again disappointing but not unexpected. Quarterly revenue was $2.66 billion, versus revenue of $3.02 billion for the prior year quarter. Comparative store sales dropped a miserable 11.9 percent. The Company reported a net loss of $586 million, at $2.66 per share.

Ackman’s relationship with Penney has been tumultuous. When he began buying the stock in 2010, he strongly believed the ailing retailer’s fortunes could be turned around. Pershing became the largest shareholder in October of 2010. Ackman then joined the Board in 2011. He was responsible for the installation of new management in an attempt to update the stodgy image of the Company.

He brought in Ron Johnson, who had previous success with Apple’s retail operations. However, Johnson was not able to get the job done. He made massive changes to the retail strategy by eliminating the deep discounts which customers had come to expect. He further undertook substantial and costly renovations to make stores more upscale. This strategy ultimately drove away current customers, and failed bring new ones through the doors. The Board let Johnson go earlier this year, and reinstated his predecessor, Myron Ullman. Since assuming his previous position, Ullman has brought back discounting and the merchandise which appealed to loyal customers put off by Johnson’s retail strategy.

Ackman disagreed with various executive appointments made by Ullman, stating that they did not comply with corporate requirements. Ackman said in a letter that he spoke with J.C. Penney CEO Allen Questrom who agreed to return as chairman based upon approval of a CEO other than Ullman. The disagreement was very public. George Soros even got involved, indicating that Ackman was acting out of line by demanding the replacements. Then, a few weeks ago, Ackman resigned from the Board. Ronald W. Tysoe was appointed to replace him, with another director to be appointed at a later date.

J.C. Penney shares are down over 19 percent in the past month, and 32 percent year to date. 62 million shares were being sold short as of August 15th, indicating may on betting on a further decline. Still, while Ackman exits his position, other hedge funds are making bullish bets on the retailer. The recent 13F filing from Soros Fund Management shows a new position of 19.9 million shares, with a market value of $273 million. It was further reported that Kyle Bass of Hyman Capital is buying shares, along with a bullish bet on the Company’s debt.

Disclosure: The author has no position in the stocks mentioned herein, and no plans to initiate a position in the next 72 hours.