J.C. Penney Company, Inc. (NYSE:JCP) has experienced an increase in hedge fund interest recently.
If you'd ask most stock holders, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open today, we choose to focus on the leaders of this club, around 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds' total asset base, and by monitoring their best picks, we have revealed a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as important, bullish insider trading activity is another way to parse down the financial markets. Obviously, there are a variety of incentives for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this method if "monkeys" know where to look (learn more here).
With these "truths" under our belt, we're going to take a gander at the recent action regarding J.C. Penney Company, Inc. (NYSE:JCP).
At year's end, a total of 27 of the hedge funds we track held long positions in this stock, a change of 4% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Pershing Square, managed by Bill Ackman, holds the largest position in J.C. Penney Company, Inc. (NYSE:JCP). Pershing Square has a $770.2 million position in the stock, comprising 8.4% of its 13F portfolio. On Pershing Square's heels is Larry Robbins of Glenview Capital, with a $143.9 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other peers that are bullish include William B. Gray's Orbis Investment Management, and Robert Jaffe's Force Capital.
As aggregate interest increased, specific money managers were leading the bulls' herd. Pzena Investment Management, managed by Richard S. Pzena, initiated the largest position in J.C. Penney Company, Inc. (NYSE:JCP). Pzena Investment Management had 19.2 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $4.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson's Adage Capital Management, Daniel Arbess's Xerion, and David Costen Haley's HBK Investments.
Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past six months. Over the last half-year time period, J.C. Penney Company, Inc. (NYSE:JCP) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity 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 the members of the department stores industry and their market caps resemble JCP's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS)||11||1||0|
|Kohl's Corporation (NYSE:KSS)||35||1||5|
|Saks Inc (NYSE:SKS)||11||0||6|
|Sears Holdings Corporation (NASDAQ:SHLD)||17||2||2|
|Dillard's, Inc. (NYSE:DDS)||19||1||3|
With the returns demonstrated by Insider Monkey's tactics, everyday investors must always monitor hedge fund and insider trading sentiment, and J.C. Penney Company, Inc. (NYSE:JCP) is no exception.
See the 7 most bullish money managers on the next few pages: