This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Investing Lesson of J.C. Penney

NEW YORK ( TheStreet) -- The J.C. Penney (JCP - Get Report) saga continues, and it's not an uncommon story.

The old-time retailer where you grandparents probably shopped is trying to regain some of the relevancy it enjoyed during much of its 111-year history.

Unfortunately, that's a tall order. Just ask anyone you know how often he or she goes to the mall and visits the local Penney's. I'd be surprised if you get many responses in the affirmative.

It was just a couple of years ago that my brethren in the value crowd were touting the company as a must-own name.

That's when Ron Johnson, former Apple (AAPL) retail wiz took over as CEO.

Based primarily on the belief that Johnson could single-handedly turn the company around, investors bid shares up from $24 in August of 2011 to about $43 by the following February. I called that gain the "Ron Johnson premium."

Johnson would not only make a great CEO, many said, but he was also a true believer, putting his money where his mouth was. In fact, Johnson coughed up $50 million to purchase 7.3 million 7 1/2-year J.C. Penney warrants that he had to hold for at least six years. The kicker was the strike price-$29.92. If Johnson was willing to take such a risk, many believed, in which he could lose $50 million if the stock did not perform well, that was good enough for them.

JCP Chart JCP data by YCharts

Of course, the story did not quite work out as planned. Same-store sales plummeted, and Johnson was gone by this past April. Now the hunt is on for a new CEO, one that can "really" turn the company around. The quest, of course, is being driven by Bill Ackman, whose firm is Penney's largest shareholder.

It was Ackman that had the value crowd so riled up about the company in the first place. To his credit, Ackman has been a wise investor in many cases over the years, but this one has been a debacle so far.

As a frequent attendee of the Value Investing Congress, I saw the presentations on J.C. Penney firsthand, and was enamored by the company's vast real estate holdings.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JCP $9.48 -1.50%
AAPL $95.40 1.90%
FB $117.96 -0.51%
GOOG $695.72 -0.36%
TSLA $237.27 -1.90%


Chart of I:DJI
DOW 17,770.49 -120.67 -0.67%
S&P 500 2,063.10 -18.33 -0.88%
NASDAQ 4,772.3240 -45.27 -0.94%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs