J.C. Penney Company, Inc. (JCP): A Hedge Fund Boosts Its Stake

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A market-moving update, Larry Robbins’ hedge fund Glenview Capital Management just disclosed ownership of about 20.1 million shares of J.C. Penney Company, Inc. (NYSE:JCP), in a 13G filing with the Security and Exchange Commission. The value of the stake amounts to $273.4 million, at the current price of the company’s stock. In comparison with the stake disclosed in the fund’s second quarter 13F filing, Robbins’ hedge fund increased the position in J.C. Penney Company, Inc. (NYSE:JCP) by over 11.6 million shares.

J.C. Penney Company, Inc. (NYSE:JCP)

If we take a look at the Glenview’s equity portfolio from the last year, we can notice that Larry Robbins has been bullish on J.C. Penney. The hedge fund first purchased a stake in J.C. Penney Company in the third quarter of 2012, the position at that time containing about 4.5 million shares, valued at $108.3 million. During the quarters following the purchase, Glenview has been strengthening its position in the company, and only during the second quarter of 2013, the hedge fund dumped about 1.1 million shares.

If you were to ask many investors, hedge funds are viewed as delayed, old investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey aim at the top tier of this club, around 525 funds. It is widely held that this group has its hands on most of the smart money’s total capital, and by monitoring their highest performing picks, we’ve revealed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we‘ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as useful, optimistic insider trading sentiment is a second way to analyze the stock market universe. Just as you’d expect, there are a variety of incentives for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if piggybackers understand what to do (learn more here).

Keeping this in mind, let’s study the newest info surrounding J.C. Penney Company, Inc. (NYSE:JCP).

How are hedge funds trading J.C. Penney Company, Inc. (NYSE:JCP)?

In preparation for the third quarter, a total of 46 of the hedge funds we track held long positions in this stock, a change of 28% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.

According to our 13F database, Pershing Square, managed by Bill Ackman, holds the largest position in J.C. Penney Company, Inc. (NYSE:JCP). Pershing Square has a $667.4 million position in the stock, comprising 6.1% of its 13F portfolio. On Pershing Square’s heels is George Soros of Soros Fund Management, with a $341.4 million position; 3.7% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism include Richard Perry’s Perry Capital, and Patrick McCormack’s Tiger Consumer Management.

With a general bullishness amongst the titans, particular hedge funds have been driving this bullishness. Pershing Square, managed by Bill Ackman, created the most outsized position in J.C. Penney Company, Inc. (NYSE:JCP). Pershing Square had 667.4 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also initiated a $341.4 million position during the quarter. The other funds with new positions in the stock are Richard Perry’s Perry Capital, and Patrick McCormack’s Tiger Consumer Management.

How have insiders been trading J.C. Penney Company, Inc. (NYSE:JCP)?

Insider buying made by high-level executives is best served when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, J.C. Penney Company, Inc. (NYSE:JCP) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to J.C. Penney Company, Inc. (NYSE:JCP). These stocks are Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS), Kohl’s Corporation (NYSE:KSS), Saks Inc (NYSE:SKS), Sears Holdings Corporation (NASDAQ:SHLD), and Dillard’s, Inc. (NYSE:DDS). This group of stocks are in the department stores industry and their market caps are similar to JCP’s market cap.

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