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Here is What Hedge Funds Think About J.C. Penney Company, Inc. (JCP)

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of J.C. Penney Company, Inc. (NYSE:JCP) based on that data.

Is J.C. Penney Company, Inc. (NYSE:JCP) a bargain? Money managers are taking a pessimistic view. The number of bullish hedge fund positions fell by 1 in recent months. Our calculations also showed that jcp isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Charles Davidson - Wexford Capital

Let’s go over the fresh hedge fund action regarding J.C. Penney Company, Inc. (NYSE:JCP).

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

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JCP over the last 13 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

No of Hedge Funds with JCP Positions

More specifically, Tyvor Capital was the largest shareholder of J.C. Penney Company, Inc. (NYSE:JCP), with a stake worth $10.9 million reported as of the end of September. Trailing Tyvor Capital was Masters Capital Management, which amassed a stake valued at $8.3 million. Wexford Capital, Citadel Investment Group, and Armistice Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Because J.C. Penney Company, Inc. (NYSE:JCP) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers that decided to sell off their entire stakes last quarter. Intriguingly, Robert Bishop’s Impala Asset Management dumped the biggest position of the 700 funds followed by Insider Monkey, comprising an estimated $24.8 million in call options. Alexander Mitchell’s fund, Scopus Asset Management, also dropped its call options, about $9.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as J.C. Penney Company, Inc. (NYSE:JCP) but similarly valued. We will take a look at Kimball Electronics Inc (NASDAQ:KE), MediciNova, Inc. (NASDAQ:MNOV), Resources Connection, Inc. (NASDAQ:RECN), and Odonate Therapeutics, Inc. (NASDAQ:ODT). This group of stocks’ market caps are closest to JCP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KE 9 38747 0
MNOV 2 3713 -1
RECN 13 40990 0
ODT 8 310000 0
Average 8 98363 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $43 million in JCP’s case. Resources Connection, Inc. (NASDAQ:RECN) is the most popular stock in this table. On the other hand MediciNova, Inc. (NASDAQ:MNOV) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks J.C. Penney Company, Inc. (NYSE:JCP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None. This article was originally published at Insider Monkey.

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