*from www.bloomberg.com, Mar. 5, 2013 (To view original article click here.)
Take Away #1: J.C. Penny Co. (JCP) slid to an almost four-year low after Vornado Realty Trust (VNO), once its second biggest shareholder, sold almost half of its stake.
Key Facts and Figures:
- Vornado sold a 10-million share block of J.C. Penny stock at $16.40 each.
- J.C. Penny fell 9% to $15.24 at 11:07 a.m. in New york after sliding as low as $15.05, the lowest intraday price since March 2009.
- Monetizing J.C. Penny’s real estate more difficult and less lucrative than initially thought, says Lorraine Hutchinson, of Bank of America Corp.
- “We think Vornado could be back in the market in the near term to sell its remaining 8.6 million shares,” says Hutchinson and reiterates her underperform recommendation.
- J.C. Penny dropped 15% this year after slumping 44% in 2012.
- Vornado, last week reported a $224.9 million loss on its 10.7% stake in J.C. Penny, rose 2.9% to $83.74 today.
- Vernado once the second largest investor in J.C. Penny now ranks third after Bill Ackman’s Pershing Square Capital Management LP and Dodge & Cox, according to Bloomberg data.
Take Away #2: Vornado chairman Steven Roth shifts from his stance in November when he was vocal about his support for CEO Ron Johnson.
Key Facts and Figures:
- Former Apple Inc. retail chief Ron Johnson joined as J.C. Penny CEO in November of 2011.
- Roth showed support for Johnson in a Nov. 2 earnings call saying, “This is a tough period. We understand that, but remain committed to the investment.”
- On a recent Feb. 27 conference call, Roth said, “J.C. Penny is an investment in progress now, and it would be inappropriate of me to talk about what our holding period might be…”
Take Away #3: With Vornado selling, the value of J.C. Penny-owned real estate in question.
Key Facts and Figures:
- Maxim Group analyst Rick Snyder estimates J.C. Penny’s real estate is worth about $50 per square foot, not enough to cover the company’s $2.9 billion of long term debt.
- J.C. Penny’s shares declined 44% from June 13, 2011, through yesterday, the day before Johnson was announced as CEO.
- Over the same period, the S&P 500 Retailing Index gained 45%.
*To view original article from www.bloomberg.com click here.