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J.C. Penney Company, Inc. (JCP), Nordstrom, Inc. (JWN), Target Corporation (TGT): Hedge Funds and the Dangers of the Herd Mentality

Other places to maybe not lose money

If you’re not interested in following the lemmings over the cliff, you might consider some of the more successful competitors in the retail marketplace. If that’s the only criteria, your options are effectively endless, but let’s look at two.

Nordstrom, Inc. (NYSE:JWN) has had solid success over the last year, and its plans are much more robust. The company put up a 4.4% increase in year-over-year comparable sales last quarter, and it has plans to increase its ability to meet customer demand by adding fulfillment centers and broadening its online product availability. That’s going to help the business grow revenue and income, even if retail conditions remain challenging.

If that’s too rich for your blood, you can always check out Target Corporation (NYSE:TGT). The retailer had a smaller increase in comparable-store sales, with the second quarter pushing up just 1.2% from the previous year. Even so, the business had some good returns, and it’s now focusing on driving more foot traffic and converting those customers into regulars through its popular REDcard reward program.

The bottom line is that J.C. Penney got a boost because some investors were happy to follow hedge funds into the dark. I’m not ever going to be one of those investors, and the plans that J.C. Penney have in place don’t give me much faith in its future success. Instead, I’m looking at other well-known, better-placed businesses to fill that space in my portfolio.

The article Hedge Funds and the Dangers of the Herd Mentality originally appeared on and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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