Perry Corp, the hedge fund managed by Richard Perry and one of the largest shareholders of J.C. Penney Company, Inc. (NYSE:JCP) significantly reduced its stake in the department store chain based on its latest 13D filing with the Securities and Exchange Commission (SEC).
The hedge fund sold 9 million shares of J.C.Penney Company, Inc. (NYSE:JCP), bringing its stock-holdings from 19 million shares (8.62 percent) to 10 million shares (3.28 percent). Based on the regulatory filing, Perry Corp sold its stake at a price range of around $9.03 to $9.59 per share on Friday, September 27 in a series of transactions in an open market.
Perry Corp was one of several hedge funds that were bullish on the turnaround efforts of J.C. Penney Company, Inc.(NYSE:JCP) after Pershing Square Capital Management, the hedge fund headed by activist investors, dumped its entire 39 million shares in the embattled department store chain. When Ackman sold its stock-holdings in the company, Perry Corp acquired 3 million shares at $12.90 per share, which only shows his strong confidence in J.C. Penney Company, Inc. (NYSE:JCP).
The recent decision of Perry Corp to sell a significant number of these shares indicates that its confidence in J.C. Penney Company, Inc. (NYSE:JCP) was shaken last week after the stock price of the company suffered a sharp decline due to liquidity concerns. The issue prompted the management of the company to execute an underwritten public offering of 84 million shares for $9.56 per share to raise additional cash.
Citi Research analyst, Deborah Weinswig, estimated that the offering would result in shares dilution of around 38 percent to 44 percent, depending on whether the underwriters would exercise their 30-day option to buy additional 12.6 million shares of J.C. Penney Company, Inc. (NYSE:JCP). Weinswig reiterated her sell rating and $7 price target for the shares of the department store chain.
The stock price of J.C. Penney Company, Inc (NYSE:JCP) closed at $9.05 a share, down by 13 percent on Friday, due to the announced public offering of 84 million shares. The stock tumbled again on Monday by 2.71 percent to $8.81 per share.
Several other hedge funds are losing money by the continuous decline of J.C. Penney’s stock, including Hayman Capital Management and Glenview Capital Management, headed by Kyle Bass and Larry Robbins, respectively.