It's been a tough year for J.C. Penney ( JCP) shareholders, to say the least. Since the start of 2012, shares of the department store chain have slid more than 40%. (It was one of the 10 Worst-Performing S&P 500 Stocks in the Second Quarter.) Still, Ackman is betting on shares in a big way this year. His fund owns close to 18% of shares after picking up 360,200 shares of JCP in the most recently filed quarter. Hopes were high for Penney when the now mid-cap firm recruited Ron Johnson from a high profile retail job at Apple (AAPL) to head the beleaguered firm. But it seems like investors have already lost faith in Penney's turnaround potential. Still, JCP has positive cash flow, a network of more than 1,100 stores, and a valuable (if tired) 110-year-old brand name that still draws traffic through its stores. Retail is an extremely competitive business, and JCP didn't enter 2012 with the best positioning to begin with. As new plans for merchandising, cutting debt, and advertising start trickling down to the firm's financial statements, investors who gutted it out are likely to see their patience rewarded. After all, sentiment is so bad in shares right now that there is value to be had. And activist investors like Ackman (a board member since 2011) want to see to it that the value gets realized. Second-quarter earnings on Aug. 10 should be telling for JCP. For another take on J.C. Penney, it also shows up on a list of 4 Sucker Stocks to Avoid at All Costs.