Billionaire investment god George Soros has bought 7.9% of J.C. Penney Co. Inc. (NYSE: JCP). His filing with the Securities and Exchange Commission said the investment is passive, but Soros is not the sort to lose vast sums of money. He must have a plan for his investment, even if he has not revealed it. He must know what any retail analysts does. J.C. Penney cannot become profitable quickly unless it closes many of its stores

Soros joins two other unfortunate investors. Vornado Realty Trust has already sold some of its shares. Pershing Square Capital Management is run by the bungling William A. Ackman, who sits on J.C. Penney’s board for now. Ackman must desperately want out of an investment that has cost his fund hundreds of millions of dollars as J.C. Penney’s stock has fallen. Maybe he can get Soros to buy some of Pershing Square’s position, as the last fool to move into the stock.

Soros might believe that J.C. Penney stock has fallen so low that it has become a bargain, almost no matter what happens to the company — a restructuring or a sale. Shares traded above $43 in February of 2012. They now sit just above $15, although the Soros move is bound to give them a lift.

J.C. Penney is running out of money. It will need to borrow more, and it has retained AlixPartners to help with that. However, this turnaround specialist has little to work with, and new CEO Mike Mike Ullman should be handling the job on his own. Ullman is a former J.C. Penney chief executive and ought to know the company better than anyone else does.

Analysts have said that J.C. Penney’s real estate holdings may have tremendous value, but spread across the country at hundreds of locations, it would be hard to unlock that value quickly. So that move is not an option as part of a solution.

Soros may figure that he knows J.C. Penney’s only option, which probably already has been decided on by AlixPartners, Ullman and Ackman. The retailer has too many stores, by the hundreds. A company with same-store sales that have dropped by more than 20% during the past four quarters must have some locations that are not, and will never be, profitable. J.C. Penney will need to book some one-time charges to shutter them. The move is the retailer’s only option. Its portfolio of locations is much too large to support dwindling customer traffic.

Soros may be betting that J.C. Penney will do the only thing it can do, and do it soon. If the retailer does not close stores, he will be stuck with a very poor investment.

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