U.S. markets are now making new highs with the Dow closing at a new record. The S&P 500 is not too far behind. Markets will get a chance to make new intraday highs after employment firm ADP said the private sector added 198,000 in February. Economists polled by Reuters were expecting 170,000 new jobs. Official numbers from the Labor Department will be released on Friday.

Shares of J.C. Penney (JCP) are now trading at new 52-week lows after analysts at Citi and Oppenheimer downgraded the stock. Citi sent out a note stating that it was concerned with how long J.C. Penney will return to top line growth. It definitely looks like the pressure has just been turned up a notch on CEO Ron Johnson. Reuters is reporting Johnson has until the end of the year to turn around the retailer and slow down massive declines in sales. Reuters also noted that Pershing Square’s Bill Ackman did not buy the shares that Vornado sold. As usual, analysts are late to the party and are now kicking J.C. Penney while its down. But if you’re a J.C. Penney shareholder, you have to win the okay to go ahead with Martha Stewart as it will bring confidence to the company and Johnson’s plan. Martha Stewart appeared in court on Tuesday to defend the J.C. Penney deal and was “shocked” as the “J.C. Penney deal was an earnest, honest and forthright business decision for her company.” (Reuters)

The major Gurus holding shares of the struggling retailer include:

• Bill Ackman’s Pershing Square which owns 39 million shares
• Dodge & Cox which owns 20.225 million shares
• Hotchkis & Wiley which owns 13.877 million shares

Bill Ackman is the one to watch.

Earnings

Earnings season has calmed down a bit but some companies continue to report quarterly and annual numbers. Shares of office supplies retailer Staples (SPLS) are up more than 1% in early trading after earning $0.46 per share in the fourth quarter versus analyst estimates of $0.45. The company also raised its quarterly dividend to $0.12 to $0.11. The company’s revenue fell short of analyst revenue expectations and cited continued weakness in Europe and North America. To bring back sales, Staples is planning to triple the number of products it sells online and has started selling Apple (AAPL) accessories online and will introduce those accessories in their stores in the first quarter.

For the most part, Gurus have been bullish on Staples with a number of them adding to existing positions or establishing new ones. These Gurus are:

• Donald Yacktman and the Yacktman Focused Fund (New Buy, 0.36% impact to portfolio)
• Whitney Tilson, T2 Partners (New Buy, 0.13% impact to portfolio)
• Joel Greenblatt, Gotham Capital
• Diamond Hill Capital
• Hotchkis & Wiley
• Paul Tudor Jones, The Tudor Group
• Chuck Royce, Royce & Associates
• Jeremy Grantham, GMO
• Steven Cohen, SAC Capital

The other retailer reporting earnings is Big Lots (BIG) whose shares are up after the company reported fourth quarter EPS of $2.09. Analyst were expecting EPS of $1.98. The stock is trading higher after the company raised its 2013 forecast and is now expecting EPS of $3.05 to $3.25 versus analyst estimates of $2.90.

Gurus have been net sellers of Big Lots with a number of them selling out completely. Those Gurus who have sold out completely or started to reduce their positions include:

• Zeke Ashton, Centaur Capital Partners
• Whitney Tilson, T2 Partners
• Michael Price, MFP Investors
• David Dreman, Dreman Value Management
• Joel Greenblatt, Gotham Capital
• Jeremy Grantham, GMO

Disclaimer: None

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