Ackman Down Over $180MM On JCPenney As CDS Crosses 1000 bps

Tyler Durden's picture

While last night's earnings (and conference call) were anything but promising, credit markets appear to have grown even more concerned about JCP's future than the equity market. As Barclays notes that JCP will "likely need bridge liquidity", CDS on JCP has surged 90bps crossing the worrying 1000bps level (+1.5pts to 15pts upfront), implying fears of insolvency growing very fast. With Groupon having lost a quarter of its market-cap this morning, it appears JCP is not be outdone as it stock (and Ackman's dreams) cross the down 20% mark. The question is - will Icahn provide the DIP financing? Finally: why, oh why, can't JCP just expand its multiple a few turns: works for the S&P every day, and after all it's not like cash flow, or rather lack thereof, matters in the New Normal.

Via Barclays Credit:

We are reaffirming our Underweight recommendation on JCP. We expect sales trends, traffic, and margins to remain negative through the next two quarter as JCP undertakes the repositioning of its Home department, which we expect to be disruptive to the selling floor. JCP indicated it plans to continue to fund the transformation out of operating cash flow; however, we believe JCP is likely to need to bridge liquidity (or simply source liquidity) through drawing its credit facility by the second quarter. We fundamentally remain skeptical that the company will be able to drive the  “trendsetters, starry-eyed, and sexy” (to use the company's branding of these targeted customers), into the shops (it is doubtful that this demographic knows what a pre-print advertisement is, in our view).

JCP -20%...


CDS trades points upfront but equivalent over 1000bps running now... while credit and equity trade in a non-linear fashion, the divergence is clear...


Charts: Bloomberg

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Bam_Man's picture

Chief Brody to Capt. Ackman:

"You're gonna need a bigger boat."

RougeUnderwriter's picture

Hooper drives the boat, Chief

francis_sawyer's picture

I hope Ellen DeGeneres got paid in 'shares' for the endorsement... [with a 5 year lockup]...

Mugatu's picture

God its great to see this asshole get his ass reamed two different ways!

FecundaGoat's picture

He's definetly a 2 input man.....

TruthInSunshine's picture

It would be very pleasing to see Ackman get decimated on JCP and Icahn get decimated on the Herbalife "You Sell Our Worthless Shit To Family, Friends & Whomever You Can Extract Pity From" fraud-scam.

buzzsaw99's picture

they aren't relatives, they are business opportunities to be exploited

NoDebt's picture

Ackman's on the wrong side of both trades.  Right about now he should be loading the revolver, cocking the hammer back and pointing it at his head.

TruthInSunshine's picture

Don't ask me to buy any Herbalife "product" from you bro.

I'm gettin' sick of the Girl Scout Cookie & "will you pledge-per-mile-walked/ran/crawled a-thon for my kid's school" bullshit.

DeadFred's picture

Maybe he can get a bridge loan from Carl. I'm guessing he's pretty flush right now.

LasVegasDave's picture

What's with the Ackman Hate?

(Yeah, I get he's a Yid...)

But he uses private money, unlike Banksters, and he's out taking risks with his and other people's money.

Is that kind of thing evil unto itself?

TruthInSunshine's picture

Justifiable guilt-by-association. Ackman's just a smoother, better mannered version of Icahn.

francis_sawyer's picture

Icahn never got the "metrosexual" thing going...


You might be 'metrosexual' if:

- Your nom de plume is kito & you look like you can't pass by a Banana Republic without stopping in for a purchase


@LVD ~ Welcome back!... I'm glad to see you've finished "un-winterizing" Sheldon Adelson's pool... Must have been a big job...

Freddie's picture

I can recall a REIT that Ackman took over and he screwed the shareholders.  The REIT was not a great perfromer but was holding his own.  Karma is real about 90% of the time.

azzhatter's picture

Personally I don't like pussified bankster type dudes like Ackman

mac768's picture

.. now he needs to double down on his HLF short bet to get even :)

... unless Icahn the Black Knight gets into the arena :)


....... before the end of another great empire

Agent P's picture

I overheard Ichan say JCP was a ponzi scheme.

francis_sawyer's picture

all paper is ponzi in the end...

BlueStreet's picture

Icahn was calling him Axman on CNBC, pretty fitting today as his investors are definitely getting the ax taken to their accounts. 

dick cheneys ghost's picture

paging JC Penny, paging JC Penny...................Montgomery Ward on line 1

francis_sawyer's picture

 Robert Stack: "Passengers sure to die ~ Airline negligent"

Jonny: "There's a sale ON Penny's!"

DeadFred's picture

Dang! This is no joke. I used to know a bunch of KMart jokes and they all get blank stares now. Same goes with the Monkey Ward jokes. Now my Penny's jokes are threatened? I tell it's a plot against me and my maturity-challenged memory.

StychoKiller's picture

C'mon, how's yer J.W. Woolworth stawk holding up? :>D

Anyone have fond memories of "The May Company?"

The Answer Is 42's picture

Tyler, did you pick up that US basketball team just tied with North Korea 110:110, complete with cheerleaders with short skirts and pompoms? Is there a news blackout on this? Nuclear test pays. Watch out for Iran.

RougeUnderwriter's picture

Penny describes what the stock price is going to be shortly

HD's picture

Well now we know how bad off you have to be to make Sears look good...


McMolotov's picture

What the hell happened with Penney's?

I'm not an old guy, only in my mid-30s, and I remember the stores actually being decent at one time. Over the past ten years, it's almost like they've done no maintenance of any kind. Carpet stains everywhere, holes in the walls, dressing rooms with broken doors... Not to mention they have several different check-out areas around the store but there's usually only one person available, and it's typically either a 20-year-old who's clueless or some old woman in her 60s who looks like she's only working because otherwise she wouldn't be able to pay for her diabetic supplies.

They really went to shit, and the way they've declined over the years is representative of what's happened to the entire country. Depressing as hell.

N. B. Forrest's picture

It's been taken over and run by a bunch of shit packers. 


They may all be screwing each other and having a jolly good time, but they don't know what normal Americans like. 

Dr. Engali's picture

I look forward to seeing him go on CNBS and try to convince the world how he is right and the market was wrong after JCP goes bankrupt.

SheepDog-One's picture

So at least SOME of the insider heavy hitters are taking it up the kornhole in our 'Step right up and place ya bets! Everyones a WINNA!' totaly broken markets. Someone have it our for Ackman?

DeadFred's picture

Normal social interactions for sharks.

cxl9's picture

Hanlon's Razor not withstanding, no one could possibly be this incompetent. I wonder who paid this guy Johnson to fly JC Penny into the ground.

SAT 800's picture

But, of course, this news is BULLISH ! The freaking S&P is rallying again. I'm going back to my lifelong position of amused spectator. These people really are crazy.

Frozen IcQb's picture

FINALLY, some info that’s worth the watch.  Educational too.

Dagn! those buffalo wings look good.


SAT 800's picture

What's your take on business in Europe? I think the French economy is starting to smell like cheese that's past it's "sell by" date? What do you see?

Sudden Debt's picture

Well, these last 2 weeks everything is grinding to a halt.

It's just weird BIGTIME!

It's like every business is now faced without a order wallet.

And all at the same time!

Industrial output is dropping over 20% here in Beglium overall and our French branch itself is almost nearing bankruptcy. They are sitting on a loss of 35% this year already.

And as we supply maintenaince tools and supplies for metal and machine building and repair. That counts.

It's bad. What can I tell you. Even the strongest sectors are pulling back.

Over here, most people realize we'll get 2008 all over again because we get all the same signs and that also puts a brake on consumption.


StychoKiller's picture

Ya keep beatin' the dog and then you expect it to come when you call?

Glass Seagull's picture

Icahn is cackling somewhere

FJ's picture

Best price Friday.....already on Thursday?

fuu's picture

What was that trick BAC used to book the drop in stock price and rise in CDS?

fonzannoon's picture

You mean DVA?

BAC just sits there with a hand gun and is ready to point it at their head and yell "I'm Gonna do it!"

If JCP yelled that no one would give a shit.

Bam_Man's picture

Michael Ray Richardson to Coach Ackman:

"Da ship be sinkin'."

SAT 800's picture

The Spanish are special; during the Spanish Civil war, which was kind of a dress rehearsal with live ammo. for WW11; the spanish revolutionaries boxed up the entire Spanish Central Bank Gold Reserves in wooden crates and shipped it to Moscow, so their "Comrade" and "fearless Leader", Stalin could watch over it for them, they were worried the Nationalists might retake Madrid, which they were temporarily holding. Stalin cracked up when the ship arrived; and said, "Well, they'll never see this Gold again"; and they never did. 19 Billion; pfffht. They can do better than that, I'm sure.

buzzsaw99's picture

111 years old and nothing but debt. Buy stocks for the long run, they are a great investment in the future. They don't even own their stores. ma and pa kettle were wiser than jcp. lulz