J.C. Penney Company, Inc. (JCP) Takes Another Hit: Vornado Realty Trust (VNO), Macy’s, Inc. (M)

Page 1 of 2

J.C. Penney Company Inc. (NYSE:JCP)My brain is starting to cement J.C. Penney Company, Inc. (NYSE:JCP) and margaritas together in my thoughts — whenever I hear either term, I think, “On the rocks.” Yesterday’s bad news came from two sources. It’s been reported that investment fund Vornado Realty Trust (NYSE:VNO) has sold off a massive chunk of its J.C. Penney holding. According to The Wall Street Journal, Vornado is dumping 10 million shares, and cutting its losses. That has been the main driver behind the stock’s 10% midday fall.

On top of that, yesterday the justice overseeing the Macy’s, Inc. (NYSE:M), Martha Stewart Living Omnimedia, Inc. (NYSE:MSO), and J.C. Penney litigation mess said that J.C. Penney may not ever be able to put Stewart’s items on the shelves. The retailer has pressed ahead with the promotion and launch of the line, even as it’s being sued by Macy’s to stop the partnership. Judge Jeffrey Oing said that he may put the brakes on the whole operation, telling J.C. Penney Company, Inc. (NYSE:JCP)’s lawyers, “That’s the risk your client took.” Is there any hope in sight for investors and the business, or are we watching the last desperate gasps of an American dynasty?

It’s not good news
The move from Vornado Realty Trust (NYSE:VNO) is clearly the most troubling. The company bought into Penney alongside Bill Ackman back in 2010. In a rare spectacle, the big fund seems to be getting hosed just like the little guy. Vornado has already lost around $300 million on its position, with this newest sale adding to the fall. But the company isn’t getting out completely. This sale represents close to 40% of the company’s position, which last week accounted for 11% of J.C. Penney Company, Inc. (NYSE:JCP)’s outstanding shares.

The move is obviously an about-face on the company’s outlook, and more subtly on the belief that CEO Ron Johnson can make the big difference that he was expected to make. At the time of the Vornado Realty Trust (NYSE:VNO) purchase, its CEO Steven Roth had effectively sworn off these sorts of big investments. With the buy, the trust made a bold and loud move. Roth himself said of the deal, “If you look at the math and you look at the investment, I think you’ll agree it’s a pretty terrific investment.” Now that terrific investment — made at over $25 per share — is looking horrific.

The pronouncement from Judge Oing just compounds the misery. Not only does J.C. Penney now have to worry about a lawsuit sucking cash out of the company, it also has to worry about sunk investment costs associated with the Martha Stewart shops. Those costs cut into Martha Stewart, as well. The company reported $800,000 worth of J.C. Penney Company, Inc. (NYSE:JCP)-Macy’s, Inc. (NYSE:M) related legal fees last quarter.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!