Tomorrow is going to be a good day ;)
Marc Lasry, of Avenue Capital Group, made the investment call for the Invest for Kids conference, saying the bonds of the struggling and beaten-down retailer are worth their face value, not the 65 cents they trade near now. The call amounts to a bet that J.C. Penney, which started burning cash as sales slumped during a turbulent year, will survive.
“I think it’s a bit misunderstood, but everybody thinks it’s going to file,” Mr. Lasry said. “It’s kind of hard for this company to end up in bankruptcy when it has $2 billion in cash.”
Mr. Lasry said interest payments total only about $500 million over the coming years and that J.C. Penney should start making money again next year, making it unlikely to run into as much trouble as the bears think.
J.C. Penney has been locked in a downward spiral since activist investor Bill Ackman stormed the board and helped change management. In came Apple Inc.AAPL -2.49%’s Ron Johnson, who attempted a dramatic turnaround, but wound up seeing sales plunge.
“He was able to do this in one year,” Mr. Lasry said sarcastically. “It takes people lifetimes to do this.”
At one point, retelling the story of the troubles to the audience, he added: “I wish I was making this up, I’m not.”
Several long names have headed into J.C. Penney since Mr. Ackman resigned and the stock plunged. The company also brought back former CEO Mike Ullman and has seen results improve in recent quarters.
“It looks like everything is stabilizing,” Mr. Lasry said.
