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Hedge Fund Interest in J.C. Penney Grows

Hedge Fund Interest in J.C. Penney Grows


Hedge Fund Interest in J.C. Penney Grows

Hedge Fund Interest in J.C. Penney GrowsNEW YORK – Last week Glenview Capital Management and Hayman Capital Management announced they had acquired shares in troubled retailer J.C. Penney Company, Inc. (NYSE:JCP), joining the a growing list of hedge funds who have taken a position in the company.  According to disclosures made to the Securities and Exchange Commission, Glenview has taken a 9.1 percent stake while Hayman had accumulated a 5.2 percent stake.

With their 9.1 percent stake, Glenview has become the largest single shareholder in the retailer.  Other hedge funds with stakes in J.C. Penney include George Soros (who holds a 9 percent stake in the company) and Perry Capital (who holds 8.6 percent).  The news comes weeks after William A. Ackman of Pershing Square Capital Management, stepped down from J.C. Penney’s board, selling his roughly 18 percent stake in the company for a loss of approximately $ 500 million.

Ackman had fought to install Ron Johnson, a former Apple (NASDAQ:AAPL) executive credited with the success of their retail strategy, as J.C. Penney’s CEO, but that move backfired when Johnson was fired by the board and succeeded by his predecessor, Myron E. Ullman III, on an interim basis.

In a public statement regarding the share purchase, J. Kyle Bass, the founder of Hayman Capital Management, noted that J.C. Penney  needed to ‘get back to their knitting,’ adding that Johnson, had ‘lost sight of who the true customer is.’  The board needs to find a chief executive that can really get in touch with these customers, and rebrand and attract them.’

According to retail analysts, it would appear that the company has lost their identity.  With more than 1,000 prime locations across the country, J.C. Penney used to target middle-income families, especially for apparel and home goods.  They also had a very strong private label business.  However, over time the company started to drift as it attempted to simultaneously compete against Wal-Mart (NYSE:WMT), Target (NYSE:TGT), TJ Maxx (NYSE:TJX), Kohl’s (NYSE:KSS), and Macy’s (NYSE:M).

Year-to-date share in J.C. Penney have fallen 35 percent on the back of board disagreements and poor sales performance.  While it appears that the firms could be positioning for a fight over one the nation’s largest departments stores, it is too early to tell what vision each firm has for the company.  Furthermore is it likely that some of the hedge funds have bought into J.C. Penney, not to turn it around, but to short it.  If that is the case, the next few weeks could determine the fate of the retail giant.

Shares in J.C. Penney were down nearly 2 percent in light trading on Wednesday.

About Eric Kelso

Eric Kelso covers market updates and stock related news.

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