The news that George Soros has taken a 7.9 percent passive stake in J.C. Penney (JCP) brings to mind an old TV commercial from my childhood. In it, two boys stare with disgust at a bowl of Life cereal that their mother naively mentioned was good for them. They then push it in front of their little brother, a tiny curmudgeon named Mikey, who proceeds to gobble it up. “He likes it!” said less about the product (a testament to sugar and enriched vitamins) than the power of the person eating it. The child actor who played the mythical Mikey not only ended up on the box at one point; he came back years later to hawk the cereal as a young man.
Soros, of course, belongs to a different cast of mythical characters. Like Warren Buffett, Carl Icahn, and Bill Ackman, he’s one of those genius investors whose name alone can move a market. The formula is similar: Take a company that investors are wrinkling their noses at—J.C. Penney comes to mind—and put it in on the radar screen of a notoriously picky billionaire. If the billionaire likes it, well, we should, too.
Is Soros a man who has particular insight into retail that the rest of us can’t see? No. Has anything fundamental changed since Ron Johnson was ousted as Penney’s chief executive? Probably not. But Soros can put in the kind of money that gets a stock noticed. As news spread on Thursday, shares of J.C. Penney popped more than 6 percent.
What makes Soros different from Bill Ackman, a man who holds press conferences to tell the world what cereal he ate that morning, is the word “passive.” Soros doesn’t have grand plans for JCP, like Ackman did. He’s not agitating to change the board or swap out management. He thinks the retail chain is undervalued and that investors have been too quick to write it off for dead.
If anyone knows how that feels, it’s George Soros. When Reuters accidentally ran his obituary on April 18, his offfice issued a release to state that Soros was in fact still alive.
What better way to prove your vigor than to scramble nimbly out on a limb and take a bold bet on a retail debacle? If rumors of his death were exaggerated, it’s possible J.C. Penney’s obit is premature, too. At the very least, seeing Soros take a big bite of a broken retailer makes you stop. George likes it. He really likes it. Now he hopes that means others will want a taste, too.