Author Topic: J.C. Penney shares soar on Soros buy  (Read 1472 times)

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Offline Rapunzel

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J.C. Penney shares soar on Soros buy
« on: April 26, 2013, 06:47:28 PM »

J.C. Penney shares soar on Soros buy
The billionaire hedge fund manager has taken a 7.9% stake in the beleaguered retailer, but investors may be reading too deeply into the news.
By Jonathan Berr 3 hours ago

Shoppers at a J.C. Penney store in New York (copyright Mark Lennihan/AP)Shares of J.C. Penney (JCP +11.55%) surged more than 11% Friday on news that billionaire George Soros had taken a 7.9% stake in the beleaguered retailer.

Investors, though, need to keep this development in perspective. The 17.4 million shares were acquired by Soros Fund Management LLC, a hedge fund that reportedly controls about $25 billion in assets.

So the investment in J.C. Penney, worth about $281 million at current prices, is relatively small potatoes for the Hungarian-born financier. In fact, Soros, the company's chairman, wasn't personally involved in the decision to make this investment, according to CNBC's David Faber.

Whether Soros actually has faith that new CEO Myron (Mike) Ullman will be able to rescue the retailer from the damage left by predecessor Ron Johnson remains to be seen. Faber pointed out that Soros may be hoping to benefit from a short squeeze, which would hurt investors who are betting that the stock will fall. He also may view the investment as a short-term trade.

Soros isn't the only -- or the biggest -- stakeholder in J.C. Penney among well-known hedge fund managers. Activist investor Bill Ackman's Pershing Square Capital LLC reportedly owns a 17.8% stake in the in the Plano, Texas-based retailer.

J.C. Penney is reportedly strapped for cash, and is trying to raise $1 billion, according to Bloomberg News. Earlier this month, The Associated Press reported that the company borrowed $850 million to replenish store inventory. Soros, with a fortune estimated at $19.2 billion, has plenty to lend.

There may be even more urgency to the company's quest for cash: The retailer is facing a slew of lawsuits, Bloomberg says, from contractors who say they weren't paid for store upgrades ordered by Johnson -- who was ousted earlier this month.

Offline jmyrlefuller

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Re: J.C. Penney shares soar on Soros buy
« Reply #1 on: April 26, 2013, 08:37:05 PM »
As if I needed another reason NOT to buy from that chain. To think I was considering picking up a Hawaiian shirt from them... well, not now!

Offline truth_seeker

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Re: J.C. Penney shares soar on Soros buy
« Reply #2 on: April 26, 2013, 09:40:00 PM »
Soros makes money. If he can buy low, he's a smart investor. If the new management can pull Penny back to life, Soros makes money.

Nothing whatsoever political about it.
"God must love the common man, he made so many of them.�  Abe Lincoln

Offline Atomic Cow

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Re: J.C. Penney shares soar on Soros buy
« Reply #3 on: April 26, 2013, 09:43:29 PM »
Yep, Penny's off my list now.
"...And these atomic bombs which science burst upon the world that night were strange, even to the men who used them."  H. G. Wells, The World Set Free, 1914

"The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections." -Lord Acton

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