BUSINESS

J.C. Penney Loses Two Major Investors

Aug 14, 2013 | Updated Aug 15, 2013
AP

BOSTON (Reuters) - Two large investors in J.C. Penney Co exited the ailing retailer during the second quarter, according to new regulatory filings, before a boardroom blowup prompted the company's biggest shareholder to resign as a director.

Hotchkis & Wiley, which had owned 10.1 million shares at the end of the second quarter, and Tiger Global Management, which held 5.3 million shares, liquidated their positions between April and the end of June, Securities and Exchange Commission filings on Wednesday showed.

The two investors ranked among J.C. Penney's 15 largest shareholders during the first quarter.

Money managers who invest more than $100 million are required to report, in a so-called 13F filing, their holdings in U.S. stocks 45 days after the end of the quarter. While the information is backward looking, it can give clues to how investors are viewing certain companies and how their strategies are unfolding.

Just days into the second quarter, Ron Johnson, handpicked as J.C. Penney's chief executive by activist investor William Ackman, was pushed out after only 17 months on the job.

Ackman, whose Pershing Square Capital Management owned 17.78 percent of the company, or 39 million shares, resigned his board seat this week after an unusually public fight over the company's top management.

The company brought back Myron Ullman, who had been replaced by Johnson as CEO, but investors, including Ackman, interpreted the step as a short-term move, which created more uncertainly.

Although the company's stock recovered some ground during the second quarter and ended the three months up 15 percent at $17.08, it has fallen steadily since then and traded at $13.11 on Wednesday, when regular trading on the New York Stock Exchange ended.

It was unclear exactly when Hotchkis & Wiley, which invests $18 billion for clients, or Tiger Global Management's $6 billion hedge fund liquidated their positions.

To be sure, J.C. Penney still had powerful backers during the second quarter, including Ackman, George Soros and Richard Perry.

In fact Soros, one of the investment industry's most watched stock pickers, stepped into J.C. Penney shortly after Johnson left with a 17.3 million share stake, according to a filing made early in the second quarter.

Perry, who is married to fashion designer Lisa Perry and took over luxury retailer Barneys New York last year, owned 12 million shares at the end of the second quarter, according to a filing made last week.

Similarly hedge fund Tiger Consumer Management raised its stake by 2.05 million shares to 5.43 million at the end of the quarter.

(Reporting By Svea Herbst-Bayliss; Editing by Steve Orlofsky)

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