Following a trend of hedge funds adding JC Penney JCP to their portfolios, Bloomberg reported that hedge fund manager Kyle Bass entered a long position in the company by buying their debt.
This announcement came several hours before the company announced its earnings.
Despite top and bottom line misses, investors reacted strongly to the earnings report with shares trading up in the pre-market. EPS came in at a $2.16 loss versus $1.06 that analysts were looking for, with revenue at 2.66 billion versus an estimated 2.76 billion. The company also disclosed same store sales down 12 percent year over year.
Several funds announced the addition of JC Penney to their portfolios last week in their 13F filings. George Soros added two million shares to his position, bringing total ownership near 20 million shares. Other top additions include Tiger Consumer Management adding two million shares and Hirzel Capital adding 1.2 million shares.
Related: Whale Wathers Pile In As Hegde Funds Post 13Fs
Along with a series of additions, several funds cut and liquidated holdings. Dodge & Cox liquidated a 20.4 million share stake, Hotchkis & Wiley a ten million share stake, and HSBC sold almost five million shares of their position.
These readjustments come after drama with hedge fund activist Bill Ackman, who owns 17.7 percent of the company. After calling for the replacement of CEO Mike Ullman, Ackman caught backlash from the board of directors and shareholders, pressuring him to resign from his position on the board of directors. Investors are concerned that he will begin cutting his position.
With shares down almost 30 percent from their last earnings report, JC Penney is trading up in the pre-market to $13.73.
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