Retail

Soros Stake in J.C. Penney Lifts Shares

JCP-logo
courtesy J.C. Penney Co. Inc.
Investor George Soros reported last night that he had taken a 7.9% stake in J.C. Penney Co. Inc. (NYSE: JCP), and the news has lighted a small fire under the shares this morning. Soros is now one of the five largest stakeholders in the struggling retailer.

Some observers view the move as a vote of confidence in new CEO Myron Ullman, who replaced Ron Johnson, who was fired earlier this month. Johnson had tried to eliminate the company’s long-time strategy of offering coupons and sales. J.C. Penney customers stayed away in droves and sales plunged more than 25%. Ullman already has begun a return to the old discount strategy.

Soros joins William Ackman and his Pershing Square Capital Management as a major holder of J.C. Penney stock. Ackman owns about 17.8% of the company’s shares.

J.C. Penney has borrowed $850 million on its revolving credit facility to implement the discount strategy and also has hired financial advisory firm Blackstone Group L.P. (NYSE: BX) to help it figure out how to turn the ailing retailer around. Finding more investors like Soros is not a bad place to start.

Shares of J.C. Penney are up nearly 7.5% in premarket trading this morning at $16.37 in a 52-week range of $13.55 to $36.89.

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