Glenview Joins Bass Raising J.C. Penney Stake

Glenview Capital Management LLC joined J. Kyle Bass in raising its stake in J.C. Penney Co., becoming its biggest shareholder in a bet the retailer will recover after Bill Ackman ended a revamp effort last month.

Hayman Capital Management LP, Bass’s hedge fund, held 11.4 million shares of the Plano, Texas-based department-store chain, according to a filing yesterday. In a separate filing, Glenview said it owned 20.1 million shares, or 9.1 percent.

Bass, who focuses on corporate turnarounds, had already accumulated a long position in J.C. Penney in buying the company’s secured loans and selling credit-default swaps last month in a wager that the chain can stabilize sales and has enough funding to get through the 2014 holiday season, a person familiar with the matter has said. Glenview’s new holding more than doubles its investment.

The century-old retailer is trying to recover from former Chief Executive Officer Ron Johnson’s failed overhaul which resulted in a 25 percent drop in sales in 2012. His plan to turn stores into collections of boutiques and swapping in merchandise to court younger shoppers alienated long-time customers. Mike Ullman, who replaced Johnson, has borrowed more than $3 billion since his arrival in April.


J.C. Penney rose 6.1 percent to $13.50 at the close in New York. The stock has fallen 32 percent this year, as the Standard & Poor’s 500 Index gained 16 percent.

New York-based Glenview held 8.4 million shares as of June 30, according to a filing. Soros Fund Management LLC owns 20 million shares and Perry Capital LLC has 19 million, according to data compiled by Bloomberg.

Ackman, founder of Pershing Square Capital Management LP, who hand-picked Johnson in an attempt to turn around the retailer, ended his association with J.C. Penney last month when he sold his 18 percent stake and stepped down from the board. Ackman sold his holding for $504 million, about half of what he paid for it, capping more than two years of failed efforts to improve the retailer.

Pershing Square became J.C. Penney’s largest shareholder in October 2010 and Ackman joined the board in February 2011. He began agitating for changes and four months later the retailer chose Johnson to replace Ullman as CEO, hiring him away from heading Apple Inc.’s successful stores.

The sale of Ackman’s holding last month followed his agreement earlier in August to resign from the board after a public clash over the company’s direction and management succession. He had pushed directors to replace Ullman and drew their anger by making public a letter he sent to them saying he had persuaded former CEO Allen Questrom to agree to return as chairman if he approved of the next CEO.

J.C. Penney adopted a takeover defense plan last month that would be triggered if a person or group acquires 10 percent or more of its shares.

(Corrects Sept. 4 story in third paragraph to say credit-default swaps were sold.)
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