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The Morning Brief: Kyle Bass’s Hayman Capital Buys J.C. Penney Shares
Kyle Bass’s Hayman Capital is the latest hedge fund to load up on shares of J.C. Penney. CNBC reported that Hayman owns about 5.5 million shares of the beaten-down retailer, citing sources. The Dallas-based hedge fund also owns debt and other financial instruments in the company. Hayman joins New York firms Pershing Square Capital Management, Soros Fund Management and Perry Corp. as major holders of the stock. Two other New York hedge fund firms, Glenview Capital Management and Tiger Consumer Management, own smaller but significant stakes as well. On Tuesday Penney reported a larger loss than the analysts were forecasting, but investors liked the fact that same store sales fell 11.9 percent in the second quarter, which was better than the 16.6 percent decline reported in the first quarter. I guess that passes for good news at a reeling retailer, although it makes Sears and Kmart’s perpetual same-store sales declines look tame in comparison. In any case, the stock surged 6 percent, to close at $14.01 on Tuesday.
Herbalife, another lightning-rod stock, jumped nearly 4 percent on Tuesday after it was reported that Perry Corp. has built a sizable position over the past six weeks. There was no regulatory filing, so it means either the firm has not accumulated 5 percent of the shares or it got to that level fewer than 10 business days ago. The firm also could have bought shares in June and not reported it in its second quarter 13F under a provision that allows investors to delay the disclosure until they have fully built their positions. So, we’ll see if the firm makes sort of filing with the Securities & Exchange Commission in the coming days. The largest shareholder is Carl Icahn, who owns nearly 17 million shares, while Soros Fund Management owns 5 million shares, a stake the firm built in the second quarter. D.E. Shaw and Tiger Consumer each own more than 2 million shares.
Talk about a last-minute deal. New York-based activist hedge fund Starboard Value and Office Depot hammered out a compromise arrangement late Tuesday evening to avert a proxy fight showdown at the annual meeting on Wednesday, putting an end to their acrimonious battle. Under their deal, three of Starboard’s director nominees — Cynthia Jamison, Starboard founder Jeffrey Smith and Joseph Vassalluzzo — will join the Office Depot board. In addition, the office products retailer will expand the board from 10 to 11 directors. Afterward, the board will select a new non-executive lead director. In addition, Vassalluzzo will join the CEO selection committee in the search process for the CEO of the combined company after Office Depot completes its planned merger with OfficeMax. Starboard has agreed to withdraw its proxy solicitation.