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Why Traders Are Buying J C Penney Company Inc (JCP)

In contrast to previous sessions, J C Penney Company Inc (NYSE:JCP) has surged 6% this afternoon as retailers rally on improved sentiment and on the back of today’s L Brands Inc (NYSE:LB)’s March sales data. Although L Brands’ net sales for the period fell 7% year-over-year and its comparable sales fell 10% (with perhaps 2-3% due to the later Easter in 2017), the company’s overall results may have been better than some bearish expectations. Due to how beaten-up the sector has been in recent weeks (many long term investors fear the secular rise of Amazon.com, particularly now with emerging technologies such as virtual reality/augmented reality that could eventually deliver a more authentic shopping experience online, and drones that could eventually deliver products within several hours of an order), today’s somewhat better-than-expected L Brands data may have triggered some short covering in the broader sector and J C Penney Company Inc (NYSE:JCP) is a beneficiary of that. Although Amazon’s rise is a threat in the long run, there is still value to be had in the retail sector for many bulls.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

The smart money was slightly more optimistic in terms of the number of funds long JCP in Q4. According to our database of 742 top institutions, the number of elite funds with holdings in J C Penney Company Inc (NYSE:JCP) rose by 2 quarter-over-quarter to 34 at the end of December. Steven Boyd‘s Armistice Capital was one of the new holders, initiating a stake of 700,000 shares.

The Bottom Line

J C Penney Company Inc (NYSE:JCP) shares have rallied due to improved sector sentiment/potential short covering. For more reading, check out ‘21 Cheapest Online Shopping Sites With Free Shipping‘.

Disclosure:None

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