(Reuters) - Hedge fund Hayman Capital Management LP sold all its shares in J.C. Penney (JCP) but still holds the ailing retailer's debt, fund manager Kyle Bass told Bloomberg TV on Thursday.
Penney's shares fell as much as 10 percent to $8.65, their biggest drop since September 27, on the New York Stock Exchange.
Dallas-based Hayman Capital, known for earning millions by betting against the overheated subprime market before the financial crisis, declined to comment to Reuters.
Hayman disclosed a 5.2 percent stake in Penney in September, but reported in November that it had reduced that to about 1.87 percent. (http://link.reuters.com/qaz25v)
J.C. Penney said on Tuesday comparable-store sales rose for the second straight month in November as its aggressive discounts and the return of some in-house brands brought back shoppers to its stores.
(Reporting by Aditi Shrivastava and Sam Forgione; Editing by Don Sebastian)