George Soros Takes a 7.9 Percent in J.C. Penney, Ackman Vindicated?
Famed currency investor George Soros, famous for "breaking the sterling" in the 1980's, has taken a large 7.9 percent stake in struggling retailer J.C. Penney (NYSE: JCP). Soros now is long the stock along with Pershing Square's Bill Ackman and now is opposed by Carl Icahn.
Although he has taken a large stake, Soros' SEC filing disclosed that the stake was a passive one, meaning that unlike Ackman, he will not try to exert influence on the company. The move comes so soon after J.C. Penney has seen earnings plummet, has seen the departure of its Chief Executive, and the departure of no less than 5 other key employees in the past few months.
Ackman's Pershing Square owns approximately 17.8 percent of the stock and now has a key ally in the potential turn around of the company. Combined, the two investors own more than a quarter of the company, a very large position which should give the two power in the company should they choose to force shareholder votes for more changes.
The news came with a grain of salt however, as Chief of Construction Michael Kock became the latest executive to leave the company. The move can be seen as a stop-gap measure by the company, as reducing construction of new stores could save on Capital Expenditures, known as CapEx, and boost the bottom-line.
The bottom-line has been a serious problem as J.C. Penney lost $552 million in the fourth quarter, or $1.95 per share, much worse than the expected $0.18 per share loss. Revenue was also slightly weak in the quarter.
J.C. Penney is set to hold its annual meeting on May 13 and this event could be key to the company's survival. New Chief Executive Myron Ullman could announce new measures as a stop-gap to halt losses and boost earnings while Ackman and Soros could express confidence in the company.
Analysts have been turning slightly more positive on the stock recently, as Gilford Securities has upgraded the stock twice in April, first from a sell to neutral and then from a neutral to a buy. Buckingham Research upgraded the stock on April 15 to buy from neutral and raised its price target from $12 to $23, Morgan Stanley maintained the company at a sell and lowered its price target to $9 from $13.
J.C. Penney shares gained 7.15 pre-market to $16.33 from Thursday's close of $15.24. Shares are still well below the 52-week high of $36.89 and just off of the 52-week low of $13.55.
Latest Ratings for JCP
|May 2015||BMO Capital||Upgrades||Market Perform|
|Mar 2015||Piper Jaffray||Maintains||Overweight|
|Mar 2015||JP Morgan||Maintains||Neutral|
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