J.C. Penney Company, Inc. (JCP) Among Billionaire Michael Price’s Small Cap Picks

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MFP owned 800,000 shares of J.C. Penney Company, Inc. (NYSE:JCP) at the beginning of October, and apparently kept that stake constant through Q4. The stock price is down 60% in the last year as the retailer’s turnaround strategy has failed for the time being, which has resulted in the departure of CEO Ron Johnson. Billionaire Bill Ackman’s Pershing Square has been a major shareholder, with over 39 million shares as of the end of 2012 (find Ackman’s favorite stocks). J.C. Penney Company, Inc. (NYSE:JCP) is not expected to be profitable this year or next year.

The 13F showed the fund with 810,000 shares of Barnes & Noble, Inc. (NYSE:BKS) at the beginning of 2013. Barnes & Noble has done well year to date as the market looks for some sort of breakup of the retail and Nook businesses to create shareholder value, though the most recent data shows that over 30% of the float is held short as neither of those business segments is considered that attractive. Barnes & Noble, too, is expected to report net losses in this fiscal year (which ends at the end of April) and in the next one.

The retailers therefore look too turnaround-dependent for us to consider them as good buys at this time. Gulfmark, with the considerable discrepancy between trailing earnings and forward estimates, is also better avoided. In the case of Kaiser and Symetra, there is at least something of a value prospect but in each case revenue has been declining recently and so we would need to assure ourselves that net income will be stable to moderately increasing going forward.

Disclosure: I own no shares of any stocks mentioned in this article.

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