CNBC reported a rumor that a block of J.C. Penney Co. Inc. (NYSE: JPC) stock was for sale, with the transaction represented by Deutsche Bank. The Wall Street Journal claims the seller is Vornado Realty Trust. Its chief, Steve Roth, sits on the J.C. Penney board. But the facts have not been confirmed and may be wrong for several reasons.
The first set of potential mistakes centers around which shareholder may be the seller. Apparently seven shareholders have enough stock to dump the 10 million shares in question. These include Vornado, Pershing Square — which is J.C. Penney’s largest shareholder and a firm controlled by J.C. Penney board member Bill Ackman — and Dodge & Cox. Under any circumstances, it would be odd that a board member, in this case Roth, would so publicly break with the company and continue to be a board member.
What also may or may not be true is the price at which the shares are being sold. Media reports put that amount at $16.40 to $16.60 a share. That number could be off for a number of reasons, not the least of which that J.C. Penney shares dropped below $16 after hours yesterday. If Vornado, or any other shareholder, wants to dump a large block, it will not be at $16.60
Finally, Deutsche Bank may not represent the seller of the shares. Journalists covering the rumor may have missed the fact that several investment banks have may have joined in an effort to peddle the shares. Or, if the shares are not for sale, no investment bank is involved at all.
The J.C. Penney rumor is similar to others that race around Wall St. fueled by the media. News outlets want to be early to market with “news” which, in the haste, may turn out to be no story at all. Or perhaps some portion of the story is correct, but most of the facts are not.
Douglas A. McIntyre