Talking Numbers - CNBC | Yahoo Finance

Why Do Hedge Funds Love J.C. Penney?

Talking Numbers

Will they or won’t they make it? That’s the question investors (and consumers) want to know as they watch the latest twist in the J.C. Penney saga.

(Read: J.C. Penney's ongoing drama not helping vendor confidence)

Shares of the department store hit their lowest level in 13 years after the company announced it would raise almost a billion dollars to shore up its weakening balance sheet

The development raises not only credibility questions about management, which said it wouldn’t need to raise more equity, but also liquidity concerns for one of the nation’s biggest retailers.

(Check out: 3 Stocks to watch)

Curiously enough, despite the incredible sell-off, and apparent dysfunction, some of the savviest investors have taken considerable equity stakes in J.C. Penney, including George Soros’s Fund Management, Richard Perry’s Perry Capital and Kyle Bass’s Hayman Capital.

Current Top Shareholders:

1. Glenview Capital Management: 20.06 million shares, 9.1% ownership

2. Soros Fund Management: 19.99 million shares, 9.06% ownership

3. Perry Corp: 19 million shares, 8.6% ownership

4. State Street Corp: 17.18 million shares, 8.06% ownership

5. UBS Securities: 13.19 million shares, 6% ownership

6. Hayman Capital: 11.43 million shares, 5.18% ownership

From a fundamental level perspective, the company has been a disaster, posting declines in both sales and earnings for the past five years.

Annual Sales, Profit/Loss, EPS history:

Sales Income/Loss

Fiscal Year 2012 $12.99B ($985 M)

Fiscal Year 2011 $17.26B ($152 M)

Fiscal Year 2010 $17.76B $389 M

Fiscal Year 2009 $18.49B $251 M

Fiscal Year 2008 $19.86B $572 M

So why would the so-called smart money want to take a stake in this battered retailer? Click the video above to find out.

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: facebook.com/CNBCNumbers

View Comments (14)