J.C. Penney Company, Inc (NYSE:JCP) in the wake of the Ackman current

Posted by Lynn Eisler August 16, 2013 0 Comment 733 views

Pershing Square hedge fund manager, Bill Ackman stepped down from the J.C. Penney Company, Inc (NYSE:JCP) board on Tuesday post very open dissent with other members of the board. Now the spotlight has been trained on JCP’s quarterly report that is due to be announced on 20 August. In most likelihood, there will be at least a 16% fluctuation to either end of the scale, post the results.

There is a lot of doubt and apprehension around the sustainability of the JCP business. The concerns surrounding the company’s struggles have hoisted bearish-positions in its stock to very high levels. Over the past 2 weeks starting 1 August, 1.44M options exchanged hands in the company and 65% of the volume was in puts.

Soros ups his stake

The public spat between JCP and Ackman reached a crescendo last week and the latter demanded that Thomas Engibous, the Chairman as well as Myron Ullman, the interim Chief Executive be ousted from their respective positions. There was a definite shift in the shares on Wednesday when the share price rose and there was also a spike in call volume in late trading. After a report from the New York Post that the same-store sale growth so far was positive this month, the stock rose by 3.4%. On Thursday too, the stock moved forward even as George Soros, the hedge fund manager announced that he taken his stake in the company higher.

Latest figures

JCP stock rose by 5.49% on Thursday. The opening price of the shares was $13.39 which climbed to $13.99 and closed at $13.83. Around 32.00M shares exchanged hands in Thursday’s trading session while the average volume of shares traded over a 30-day period was 14.69. However, so far, the stock has shed 31%. This is also evident in the massive amount of short-interest in the JCP stock which is a distinct indicator that investors are skeptical.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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