Soros exits J.C.Penney, trims Herbalife, others follow

Fri Feb 14, 2014 7:30pm EST
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By Svea Herbst-Bayliss

NEW YORK (Reuters) - Soros Fund Management, one of the hedge fund industry's most closely watched investors, exited J.C. Penney (JCP.N: Quote) and trimmed its stake in Herbalife (HLF.N: Quote) late last year, marking a notable shift in course only months after buying into the companies.

The New York-based firm, which ranked as J.C. Penney's second biggest investor, sold 19.98 million shares during the last three months of 2013, according to a regulatory filing on Friday. It also cut its stake in Herbalife, where it was the fifth biggest investor.

J.C. Penney and Herbalife spent most of last year in the spotlight, with the retailer's stock price losing half its value as an ambitious overhaul fizzled and the nutrition and weight loss company surging 139 percent in the wake of a dramatic faceoff between some of the world's biggest investors.

At both companies, Soros' involvement, fueled by the firm's history of making a lot of money on savvy bets, boosted the share price and raised their credibility quotients, possibly even drawing in other hedge fund investors.

In the 40 years since 83-year old George Soros founded the firm, it has earned its investors $40 billion, including $5.5 billion last year, according to industry data. Even though the firm now invests only Soros' personal fortune, its investment decisions are still followed closely.

So when Soros bought 17.4 million J.C. Penney shares in April, not long after Ron Johnson was ousted as chief executive officer, investors cheered and pushed the share price up.

But as the company's once-ambitious turnaround plans lost steam and a former CEO returned to the helm, its biggest investor, William Ackman's Pershing Square Capital Management, abruptly exited in August. The share price kept tumbling and has lost 68 percent in the last 12 months.

While Soros was a steady J.C. Penney supporter through the end of the third quarter, the firm evidently changed its mind in the last months of 2013.   Continued...

George Soros speaks on stage at the Annual Freedom Award Benefit Event hosted by the International Rescue Committee at the Waldorf-Astoria in New York November 6, 2013. REUTERS/Andrew Kelly