Bill Miller Does It Again: JCPenney Drops Over 25% Since "Undervalued" Call (To Fresh 33-Year Low)

Tyler Durden's picture


J.C. Penney has a lot of levers they can pull to get the customers back," Bill Miller gleefully told a Schwab conference in November as he bought JCP bonds. Spreads on those bonds have risen over 200bps since then. However, it was the embattled Legg Mason guru's appearance on CNBC in mid-December that sparked re-exuberance as everyone jumped on his "undervalued" bandwagon and lifted the stock into year-end. Today, back under $6, JCPenney is once again at fresh 33 year lows. Those that followed Miller are down over 25% on their 'investment'.



The famed stock-picker is also looking at J.C. Penney, which he thinks might be undervalued. After all, he said, there's "no reason" the retailer can't get its gross margins back to about 38 percent.

Yeah - that's not working out so great for the value-investor... knife-catcher


and today's tumble back under $6 for the first time in 33 years...


Chart: Bloomberg

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Thu, 01/30/2014 - 16:37 | 4385287 Levadiakos
Levadiakos's picture

"Undervalued" is a relative term--Bill Miller

Thu, 01/30/2014 - 16:39 | 4385298 Boris Alatovkrap
Boris Alatovkrap's picture

<-- BTFD


Thu, 01/30/2014 - 16:43 | 4385321 Levadiakos
Levadiakos's picture
Einhorn closes J. C. Penny Short-Marketwatch Jul 29, 2013
Thu, 01/30/2014 - 16:55 | 4385387 jcaz
jcaz's picture

Of course there is "no reason why gross margins can't return to 38%", especially when ALL they were selling during the holidays was their 70%-off shit.....  Wow.

Dude wiins the "Captain Obvious" award this week- thanks for making my $6 puts cheap, babe.....

Thu, 01/30/2014 - 16:54 | 4385394 nope-1004
nope-1004's picture

Did I say undervalued?  Oh, I meant overvalued.  My bad.

- BM


Thu, 01/30/2014 - 17:02 | 4385427 Levadiakos
Levadiakos's picture

BREAKING-"Hacksaw" Al Dunlop tapped to replace Legg's Miller

Thu, 01/30/2014 - 19:53 | 4385931 NoDebt
NoDebt's picture

That would be CHAINSAW Al Dunlap, my friend.  Scott Paper's old HQ is about 20 minutes drive from my place.

Thu, 01/30/2014 - 18:11 | 4385699 666
666's picture

But he's an expert, and experts are never wrong! Experts also predict how the economy will do, and they've been saying how the recovery keeps picking up steam, so that must also be true. They wouldn't lie to us because they're just a bunch of egotistical numbnuts, would they?

Thu, 01/30/2014 - 17:13 | 4385443 Levadiakos
Levadiakos's picture

Mamazon! ooopsey

Thu, 01/30/2014 - 16:38 | 4385291 SAT 800
SAT 800's picture

I got a lever he can pull; half-wit.

Thu, 01/30/2014 - 16:40 | 4385304 FieldingMellish
FieldingMellish's picture

Just shoot the poor thing already. Why does it have to suffer like this?

Thu, 01/30/2014 - 16:45 | 4385335 Levadiakos
Levadiakos's picture

Because they still haven't finished the program for the credit card theft 

Thu, 01/30/2014 - 16:58 | 4385413 mayhem_korner
mayhem_korner's picture

Just shoot the poor thing already. Why does it have to suffer like this?


JCP...or Miller?  Either works, IMHO.

Thu, 01/30/2014 - 16:44 | 4385320 Dr. Engali
Dr. Engali's picture

Idiot..... Most rocks know that JC Penny is going tits up by now.

Thu, 01/30/2014 - 17:11 | 4385463 Rainman
Rainman's picture

I dunno...if they could figure out how to move prostitute party-packs they might make it.

Thu, 01/30/2014 - 16:42 | 4385325 Yen Cross
Yen Cross's picture

   Yea, but Nasdark is up over 2%. /s

Thu, 01/30/2014 - 16:44 | 4385333 Stoploss
Stoploss's picture

JCP's original written business plan was the largest catalog retailer in the country..

They deviated from that written plan.

A long time ago...


When you have a written plan, do not deviate from that plan. NEVER EVER.

Billy A. learned that lesson the hard way..

Now it's Carl's turn...


Who's next??   I'll be here the rest of the week...

Thu, 01/30/2014 - 16:47 | 4385363 Dr. Engali
Dr. Engali's picture

Everybody has a plan until they get punched in the face.

Mike Tyson

Thu, 01/30/2014 - 16:55 | 4385392 Herd Redirectio...
Herd Redirection Committee's picture

No battle plan ever survives contact with the enemy. -

Helmuth von Moltke (the Elder)

Thu, 01/30/2014 - 16:57 | 4385402 Levadiakos
Levadiakos's picture

Helmuth von Moltke the Elder trumps Iron Mike every time.

Thu, 01/30/2014 - 16:47 | 4385345 starman
starman's picture


Thu, 01/30/2014 - 16:48 | 4385359 Music101
Music101's picture

See KARL DENNINGER'S STOCK PICKS BELOW... his take on stocks just like this -- MUST SEE:

Thu, 01/30/2014 - 16:49 | 4385373 youngman
youngman's picture

If they have long underwear...they should be doing great...

Thu, 01/30/2014 - 16:54 | 4385396 TheRideNeverEnds
TheRideNeverEnds's picture

When I bought the Goldman offering a couple cents off the low I told myself I would hold that stock till I retire; in standard form I scalped out of it nearly as soon as I was up money because fuck tying up the margin to hold stock.


In retrospect I am glad I did.  

Thu, 01/30/2014 - 16:58 | 4385403 mayhem_korner
mayhem_korner's picture



It's now a penney stock.

(it's weak, I know.  Off to get some scotch, I guess...)

Thu, 01/30/2014 - 17:09 | 4385450 Hippocratic Oaf
Hippocratic Oaf's picture

Almost, Mayhem, and may very well get there.

When the 7.95's of '17 get into the mid 70's again, I may be a buyer. If only for the short maturity and the "belief" that they won't go ( . )( . )'s up

Thu, 01/30/2014 - 17:00 | 4385417 yogibear
yogibear's picture

Plenty of gorilla suits for those standing on the street corners when it's time for their going out of business sales  

Thu, 01/30/2014 - 17:07 | 4385446 mayhem_korner
mayhem_korner's picture



JCP going-out-of-business sales would be huge for employment.  Just think of all the Mexifornians that could be put on the rolls to spin those giant neon SALE! signs. 

Thu, 01/30/2014 - 17:01 | 4385426 corporatewhore
corporatewhore's picture

jcp was absolutely trashed when the "genius" Ron Johnson was given his $54 million compensation to make over jcp into a mini Nordstrom with strong Apple overlay.  His first genius move was to scream "no coupons" and allow returns with absolutely no proof whatsoever the item was purchased at jcp.  Thieves, hoodlums, drug addicts, hookers and pimps heard his siren call.  He proceeded to gut the employee rolls and make do with less, leaving maybe one employee to maintain the department and make sales.  Cash registers were obsolete so in comes the ipad.  customers thought it was bizarre.  Sales were eliminated and pricing strategies routinely "tweaked".  It was a complete and utter disaster.  Howard Davidowitz called it accurately but Wall Street was enamored of Ron's song and dance.  There was so much incongruity between their traditional customer (grandma, working class stiffs) and what Ron wanted (hip, eurotrash music and clothing).  He didn't beta test anything, just rolled out mistake after mistake.  I could write a book

Thu, 01/30/2014 - 17:03 | 4385435 ghostzapper
ghostzapper's picture

Took me all of 15 seconds to look at the weekly chart to see that the signal was given in freakin' MAY OF 2012 to quite simply stay the fuck away from this piece of shit.  Of course this genius tells the idiots on the cheerleading station to pile in based on what he "thinks" and "feels" will happen.  

Thu, 01/30/2014 - 17:11 | 4385466 TheRideNeverEnds
TheRideNeverEnds's picture

meh, I have done alright buying the dips in there, mostly with short puts around the .30 delta and I think its about that time again; premium is gtting pretty fat in there. 


I am putting out too many fires at the moment to get involved in that debacle right now though.

Thu, 01/30/2014 - 17:16 | 4385488 ghostzapper
ghostzapper's picture

Nice work.

My comment was more specific to getting long for beyond a trade.  There have been some pops but man I don't trust turds like this even if you enter at the right time at any point BOOM they announce something that confirms the overall trend down and their status as a piece of shit.  

Thu, 01/30/2014 - 17:10 | 4385454 mayhem_korner
mayhem_korner's picture



Please tell me that there remains no medical means by which Miller and Dick Bove can spawn offspring.  'Cuz that would redefine "ugly baby."

(back to my scotch...)

Thu, 01/30/2014 - 17:15 | 4385465 oak
oak's picture

target's situation is no better. the stock price had dropped from high approximately 23%.

Thu, 01/30/2014 - 18:29 | 4385748 SAT 800
SAT 800's picture

I remember when my mom gave me my first pair of new J.C.Penney jeans. I was so proud. then my Auntie gave me a Hopalong Cassidy belt with a real metal belt buckle; I was a happy little cowboy. We were a working class family; it didn't take much to make me happy.

Thu, 01/30/2014 - 21:27 | 4386217 kareninca
kareninca's picture

I remember whem my mom took me to JC Penney in the late 1970s.  We were both grossed out, the place was so dingy and the quality was so bad.  We were an aspirational upper middle class (by education; not by net worth alas) family; it took a lot to make us happy.

At this point my mom is delighted to shop at JCP if she can get a savvy friend to figure out the bestest coupons; I would shop there with coupons if there were one nearby, and if their stuff were available even more cheaply at Goodwill that would be swell too.  Our net worth has improved, for some reason, but we're not so aspirational.

Thu, 01/30/2014 - 18:49 | 4385798 Dre4dwolf
Dre4dwolf's picture

I might buy at like, 2.98$ 1.98$ I would probably be buying, at .98cents, why the fuck not?




Thu, 01/30/2014 - 20:57 | 4386120 Papasmurf
Papasmurf's picture

Is it discount to book yet?

Thu, 01/30/2014 - 23:42 | 4386643 Wahooo
Wahooo's picture


Thu, 01/30/2014 - 21:51 | 4386294 MyBrothersKeeper
MyBrothersKeeper's picture

The truth is one vague positive report and 2 hedge fund mgrs Kyle Bass and Dan Loeb drove the stock from 6 to 10.  Once they got out all that was left were the real numbers....and they haven't improved except what is being gained by closing the most unprofitable locations

Fri, 01/31/2014 - 10:27 | 4387635 mendolover
mendolover's picture

So now they insult their customer's intelligence?  I think it says alot about who they think their customers are.  How the hell do you go from an $82 stock to a $5 piece of shit?

Mon, 02/03/2014 - 11:40 | 4395769 mkhs
mkhs's picture

why is it I only see anuses from here?

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