J.C. Penney Company, Inc. (NYSE:JCP) share borrowing has been on the rise since May, according to analysts at SunGuard’s Astec Analytics. To date 45.6 million shares of the stock have been borrowed, and there’s little doubt those who are shorting the stock are breathing a sigh of relief to see today’s share price plunge in the wake of Thursday’s increase.

J.C. Penney

Ackman vs. J.C. Penney’s Board

This week J.C. Penney’s largest shareholder Bill Ackman has been trading nasty letters with the company’s board. He’s pushing for them to speed up the search for the next chief executive officer, and he wants the current chairman to be fired. After Ackman’s first letter on Thursday, shares of J.C. Penney Company, Inc. (NYSE:JCP) surged.

However, those returns have been erased today as the brawl between Ackman and the company’s board has heated up further, first with a letter from the board responding to Ackman’s first letter and then with a second letter from Ackman to the board.

Share borrowing for J.C. Penney on the rise

Meanwhile analyst David Lewis of SunGard’s Astec Analytics tells ValueWalk that it appears as if the negative momentum surrounding the company’s share price has been building for the past couple of months. According to Lewis, some investors could be expecting a correction to come.

“From a 12-month low of 28 million shares on loan (May 16), balances have increased by just over 50% to date at 45.6 million shares,” he said. “This represents a level around 70% of its 12-month high on Dec. 24, 2012 (63 million).”

Today’s decline in share price likely isn’t the correction some investors might be expecting because it hasn’t been enough to go much lower than where it was yesterday before the fight between Ackman and the board broke in the media. Investors who are shorting the stock may instead be doing so based on their expectations of continuing, longer term problems for the company.

Questrom, other old team members’ possible return to J.C. Penney

Analysts at several firms are weighing in on the possibilities for new management at J.C. Penney Company, Inc. (NYSE:JCP). There have been reports that former CEO Allen Questrom will return to the retail chain to serve as chairman, but only under certain conditions.

Sterne Agee analysts Charles Grom and Renato Basanta said their sources seem to believe there’s a good chance Questrom will be back at J.C. Penney Company, Inc. (NYSE:JCP), and they believe this will bring back a number of the company’s other former executives. They see this as a big positive if it happens and say that “a return of the Old School JCP team, under Questrom, would be a very powerful combination and materially improve its turnaround situation.”

On the other hand, Raymond James analysts have taken the opposite position to those at Sterne Agee. They think it would be a positive for the chain if Bill Ackman wins the fight and brings in a “dream team” of outside executives like Foot Locker, Inc. (NYSE:FL) CEO Ken Hicks to fill positions at the company.