Archive for the ‘Media Commentary’ Category

Apple’s Ron Johnson To be J.C. Penney’s New CEO

June 14th, 2011 Comments off

06.14.2011 original publish date
06-16-2011 update (page bottom – closed short position)
02-27-2013 update (page bottom – status)
09-27-2013 update (page bottom – status)
10-22-2013 update (page bottom – status)

Apple’s Ron Johnson To be J.C. Penney’s New CEO

original article written by Net Advisor

Plano, Texas. J.C. Penney (NYSE: JCP) announced that it is hiring Apple’s successful retail guy, Ron Johnson to head as J.C. Penny’s new CEO. JCP’s stock hit as high as $36.12 or over +19% one-day gain.

[wikichart align=”left” ticker=”NYSE:JCP” showannotations=”true” livequote=”true” startdate=”14-12-2010″ enddate=”14-06-2011″ width=”550″ height=”250″]

Investors seem a little overzealous on their expectations of what Ron Johnson can do. Investors need keep in mind that Ron Johnson is not working at Apple, he is now working at a what is generally known as a retail clothing store.

“J.C. Penney is a Retailer. It’s not Apple.”

Net Advisor™

Back to the Future?
In a similar story, Lee Iacocca turned around Chrysler from it’s first bankruptcy in the early 1980’s.

Lee Iacocca was later hired on as the new CEO for Koo Koo Roo Chicken in the late 1990’s. The thinking was at that time that if Lee Iacocca could turn around Chrysler, he could turn around Koo Koo Roo Chicken.

I remember telling a client who wanted to buy Koo Koo Roo Chicken stock against my advice and who did anyway in the late 1990’s.

I recall telling the client, “Unless Lee Iaccoca can get billions from the U.S. government, that Chicken franchise doesn’t have a chance.”

In 1998, Koo Koo Roo Chicken stock was down 84% since its January 1997 high, and never recovered.

In 2010, Koo Koo Roo’s parent filed for Chapter 11 Bankruptcy.

The stock is worthless.

Not the Same, but Still Not Apple
Now J.C. Penny is not Koo Koo Roo Chicken. Penny’s is in far better position than the chicken franchise ever was. However Penny’s no matter how you slice it, JCP is still a consumer retailer and a retailer with no special market niche. They compete with the likes of Wal-Mart, Target and 1,000’s of similar companies.

Today, retail sales reported down for the first time in 11 months. The government also revised last month’s report slightly lower.

Turning Penny’s Into an Apple?
Retail is a tough business. Johnson is a good guy for JCP to help them in their retail business. The challenge I see that the way JCP (stock) is trading today is as if somehow Johnson can turn Penny’s into an Apple. I just don’t see that ever happening. Anyone who thinks otherwise, I have a client who wants to sell you some Koo Koo Roo Chicken stock.


Short link to this article:

06-14-2011 update:
Disclosure: Net Advisor™ is representing one or more synthetic short positions via put options in JCP after this run up.

06-16-2011 update:
We closed our synthetic short position in JCP yesterday (06-15-2011), and posted our results on Twitter (same day), with +26.14% gain overnight.

02-27-2013 update:
Tweeted 02-27-2013: JCPenny Lost $552 Million, Latest Earnings Report. JCP -14% to $18.15 on the News. Stock is -50% since our report (above). Disclosure: Net Advisor™ or clients have no current position in JCP.

Detail on earnings from CBS MarketWatch


  • J.C. Penney Plunges to 13-Year Lows After $932M Stock Sale (Source: Fox Business News).
  • our view (tweeted) @cnbc @FoxBusiness Don’t believe $JCP “OK” story” Predict: Chapter 11 (losing money, assets shrinking last 3 yrs).

As of 09/27/2013: JCP stock traded 256 Million shares vs 3 month average volume of 26 million. The company is currently losing $7.32 per share and has a current market cap of $2 Billion.

10-22-2013 update:
News on JCP continues to be bearish.

“The premium on JC Penney five-year credit default swaps – a form of insurance that reflects market views of a company’s creditworthiness – on Tuesday jumped to 1,659 basis points, up 185bp from the end of last week, according to Market data.”

— Source: Financial Times ( reports (HTML) (PDF)

JCP stock trading slightly higher on 10-22-2013, but still avoiding it like ObamaCare. Next earnings report expected Nov 19, 2013. As of intraday trading today, JCP stock is now down -81.73% since this original 2011 report. Disclosure: We have no financial position in this stock.

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image: Trademark JCPenny

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Categories: Media Commentary