Tuesday, 9 April 2013

$JCP update

The stock traded 90mm shares today. there are only 220mm shares outstanding. PS own ~40mm of them.

The stock fell ~12%.

That isn't surprising given the recent pounding. Bad news already baked in there.

Most of the volume was earlier in the day and tailed off. I expect it to be heavy tomorrow. People will have taken liquidity in the stock.

If there is a bigger seller out, they will have backed off when the price gave way.

The fundamentals are awful. Chatter today of further sales decline.

Ron Johnson leaving and being replaced by the old CEO Ullman. Although "news" this isn't really new information/insight.

The last few quarters have shown that RJ's strategy was floundering, he didn't have the humility to understand or accept that. His loudest cheer leader has thrown him under the bus.

I'm not saying it can't ever happen, I just don't think it will. I don't think this is a firm that is going to get bought out. Too much risk, not room to leverage the balance sheet (if you were mad enough to want to put financial leverage onto a recovery story that has a tonne of operational leverage at this point).

Why pay a premium to get control?