J.C. Penney Bears Are Running An Obama-Campaign Like Bear Raid

| About: J.C. Penney (JCP)

This article is a follow-up to my piece on J.C. Penney (NYSE:JCP) and special situation investing. The Company is in no man's land in the weeks leading up to Christmas. There is no real news, but that doesn't keep the bears from making up news.

The company raises almost a billion of liquidity and yet gets rumored every day about nervous factors and vendors. Yet when I check my factoring sources, nothing is trading. Nervous vendors don't just talk about being nervous - they transact and lay off paper. As far as my sources can tell that is not happening, nor should it given the Company's liquidity profile. The response I am getting from the factors is a big fat nothing trading - zero. However given the constant rumor drumbeat: Canadian credit cut off, hiring of bankruptcy counsel, analyst downgrades (today a sell sider downgrades the entire capital structure primarily on the rumors and fear that they might become self fulfilling), you would think someone would be selling trade claims and yet nothing is trading. That doesn't stop bears from spreading "news" about trade getting nervous in the hopes of making the rumor self fulfilling.

As a one sell-side analyst put it to me the campaign is almost vicious and spiteful but brilliant in execution as rumors get leaked out on twitter, Seeking Alpha, Zero Hedge, the sell side and then of course and CNBC in an endless loop. Compare it to the micro targeting that Obama's campaign used so successfully - using social media and cable to the point where they reached more voters for less money than the Romney campaign. Just like the ill-fated Romney campaign, JCP is in a constant defensive crouch to the point where the Company has to come out and say such comforting things as, "no we haven't hired bankruptcy council, vendors are shipping and we never beat our wife either."

The good news is that the Company has the liquidity to outlast its critics. Christmas will come and there will be proof in the numbers. You can't rumor fact - no matter how many times you tweet. The bottom line as that while the stock has languished on 30 year lows, the Company will get its chance both this year and next year to prove its case out. When that happens, the stock will trade on fact not fiction. If they produce the numbers that I believe are fairly modest, investors should be calmed and the stock should trade materially higher.

Disclosure: I am long JCP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Positions can and do change without notice or warning.