We all got duped by J.C. Penney
The company played with words to send its stock price higher.
What are you going to do in a situation in which management issues a statement
that a turn is at hand, quelling a certain decline in a stock, and then uses its own rosy projections to offer 84 million shares at a higher price than if it had just kept its mouth shut? Isn't that what really happened at J.C. Penney (JCP) on Thursday?
The company, in an attempt to clarify impressions that it might not need money, sent its stock higher with rosy news of same-store-sales projections and then issued equity that you would have thought it otherwise wouldn't need if you took the company at face value.
To me, the story stinks, no two ways about it.
The betrayal is petty thick here, especially when you see that the company's controller resigns at the same time the offering was filed.
I hated J.C. Penney all the way down until the two former insiders, Bill Ackman and Vornado, punted their stock, and I thought it was worth a shot to buy their exit blocks. Many others did, too. In retrospect, while their buys were clearly terrible, their sells look pretty darned prescient at this moment.
No matter that PVH (PVH) CEO Manny Chirico told me on "Mad Money" that apparel had softened dramatically -- apparel being J.C. Penney's mainstay business -- and I tempered my enthusiasm. I said I thought the bottom had been reached and that was wrong, and I have to suffer the catcalls that come with that incorrect judgment.
It happens. I regret the faith I put in management's protestations that business had improved, and I am sorry for trusting them. I am acutely aware that some on the Web are blaming me for their losses, and that's going to happen periodically when you trust a company when it says it has seen a positive turn.
I am a big target, and while I do wish people would recognize that I had been negative on J.C. Penney for ages, I feel as had as everybody else, believe me. It's not the first time I believed a management and then the management, in my opinion, led me astray. It won't be the last time, either. Plus, we don't know how this ultimately will play out, but I agree with my friend Doug Kass that this one's about as outrageous as it gets.
Now, barring an actual turn in the fortunes of retail in this country, J.C. Penney could limp through the holiday season, having raised this money in the equity market, but I think it will take a very long time for trust to be restored, especially when the whole group is hated anyway.
The most important lesson? Sometimes you just get had.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.
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Cigs For Sale ! ............... Cigs For Sale ! Step right up folks and get some half price ATF cigs.
Get them while you can they are going FAST and FURIOUS !!
If a company doesnt need money they dont issue stocks or bonds. Why pay money to issue more stock if you dont need money? And why issue bonds if you dont need money (Ford.) Who in their right mind would borrow money they dont need and pay interest on it for borrowing?
These are just 2 examples of accounting lies investors hear every single day. Ford claims they are doing fine financially but then they turn around and issue new bonds at a higher rate so they can get the current bond honlders with bonds due in 5 years to cash them out and take a new payout at a higher rate over a longer term. Thats not smart business nor is that what financially sound companies do.
Exxon Mobil is buying back their stock at around $10 billion a year. Thats what a company that is fine financially does, not issue more stock.
"I am a big target"
Even when he gets had his ego is inflated.... You're a big clown Bobo ! House of Pain !
Ah ha! It was all there in the financials quarter after quarter.
How can anyone have been duped on JCP?
Who relies on management's discussion whether or not to buy/sell?
After all, if it's taking on water, chances are it will continue to sink. Worked for the Titanic.
Only two ways to survive:
a low cost provider
or a niche provider.
And JCP is neither. Only frothy economies allow for a middle ground.
Side note: Consumer confidence down for two straight months -- this may be the second act of the economic contraction that has been delayed for 5 years. The debt cycle, commodity super cycle and business cycle are all converging towards a grand finale.
Jim, put your thinking cap on and give us a homerun! If you are too naive to believe a CEO about their personal income as well as the shareholders he represents is not looking out for their own good.
This is some of the perceptions that was brought on by the fifteen year drought in the stock market. A few ups and a few downs, overall flat, this is why your under a microscope in the public eye. Fool my once shame on me mentality. I believe most of the public is diping their toes in slowly, no one is jumping in.
I would like to see a CEO come on your TV show and get the good ole boy treatment, then hit the sell button with a bat or 2x4 whatever object you would like. They may bring analysis of the market, we only have to look to WMT right now. They go and we are heading in the right direction. It's bad news after bad for that stock.
There is a very interesting Article about Pimco and agency MBS debt. The title,"Pimco shook hands with the Fed and made a Killing. It actually was located on the C-nb-c site. This kind of ties back to how firms like Goldman Created scam Derivatives, then sold them across the Globe as Triple AAA investments, then shorted the ish out them. Yet shows like C-nb-c whine about how Banks are now being wrongfully targeted. Oh Really, the Shills on C-nb-c never state how the Global FEDS are printing literally trillions just to keep the Farce Big Banks afloat. They will never remind everyone that Big Banks were and still are ground Zero for the Financial Crisis.
What reason do folks have to Trust this Globally manipulated Markets. It's a market that has more to do with Computer Programs than real people. It's a Market that has more to do with Global FEDS printing to infinity than Reality. So sure, there have been and may still be gains to be realized. However there is little Reason to hold to Infinity. Far too much corruption and Global Manipulation.
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