CNBC is reporting that Goldman Sachs is preparing a $1.75 billion loan to JC Penney, the troubled American retailer that has been looking to raise cash.
The news has the company’s stock up more than 10%, which is good news for the company but especially good news for George Soros, the investor who yesterday announced in a regulatory filing that he had amassed a 7.9% stake in the company.
It didn’t look to us like a play for long-term value, but we didn’t think the gains would be this short-term, either: First after-market trading based on the Soros stake increased the price before markets opened today, and then news of the forthcoming loan sent the stock even higher. Who says you can’t beat the market?*
Still, what does this tell us about the retailer’s business prospects? Not all that much. While the cash infusion should give its vendors confidence that the company can pay on-time, it may not be the best news that it needs to use its real estate holdings and other assets as collateral for the loans.
*If you’re an 82-year old investing legend.