Hedgeye Retail Sector Head Brian McGough has been quite vocal recently about his short Macy’s (M)/long JCPenney (JCP) trade. After the news hit that that Macy’s Chief Administration Officer Thomas Cole would be retiring after 41 years with the company, the stock sold off this morning. We covered the position in our Real-Time Alerts after buying it into the close yesterday and booked a gain. It still remains one of our top short ideas in retail.
On the other side of the trade is going long JCPenney. Improving sales trajectory for 2013 and incremental improvement in store layout and their e-commerce business will drive the stock higher this year. We like the price lower than where it is now but there’s room to consider buying it if you’re less sensitive to price.