Ackman’s JC Penney Sale: Analysts Have Mixed Feelings, Investors Don’t as Shares Gain 3%

Ackman’s leaving the building–and JC Penney (JCP) shares are staging a revival.

AP

The stock of the beaten-down retailer has gained 3.5% to $13.82 today after Pershing Square’s William Ackman filed to sell his stake in the company. The Wall Street Journal reports:

Mr. Ackman’s Pershing Square Capital Management LP is unloading its 39 million shares—nearly 18% of Penney’s stock—with help from Citigroup Inc., which underwrote the sale.

Citigroup reached agreements to sell the shares to new buyers at $12.90 each, a person familiar with the matter said. That was well below their closing price Monday of $13.35 and close to half the roughly $25 apiece that Pershing Square paid for the shares, mostly in 2010 and 2011.

Oppenheimer’s Brian Nagel and team think Ackman’s sale is positive for JC Penney:

We do not view the decision of Pershing Square to sell JCP as all that shocking. The primary concern for JCP, we believe, is that a new wave of shares hitting the market could further undermine an already weak stock price. Longer term we view the decision of Pershing Square to part ways with JCPenney as potentially positive for the chain, as it will allow the company’s management and board to focus on fixing the ailing retailer in a more cohesive fashion.

Citigroup analyst Deborah Weinswig has mixed feelings about the sale:

We note that this transaction will not help to improve the liquidity of the company (JCP does not receive any proceeds). It could also tap a meaningful portion of demand for the stock, which could make an additional capital raise more challenging. However, the completion of the sale will eliminate one of the overhangs we saw on JCP's stock.

JC Penney’s gain is all the more surprising consider what’s happened to other retailers today. Macy’s (M) has dropped 0.8% to $43.83, Kohl’s (KSS) has dipped 0.4% to $50.16 , Dillard’s (DDS) has fallen 2% to $76.19 and Nordstrom (JWN) has declined o.6% to $56.98.