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.
Shares of J.C. Penney (JCP) 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.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter at @jdberr.
- T-Mobile hands up its 'deceptive' ad campaign
- Pot use in Colorado can still get you fired
- Virgin America debuts in-flight flirting service
...Soros cooties? *L* okay, whatever.
I'll go back to JCP when I hear that they've hired back at least 2000 US workers, and I hope they'll bring in some Made in USA goods.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).
Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More
More Market News
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'