| BOSTON, April 9
BOSTON, April 9 The Hartford Capital
Appreciation Fund's bottom-up investment research on J.C. Penney
Company Inc appears to have gotten an old-fashioned
beatdown with an ill-timed bet on the retailer late last year.
The $12 billion fund run by portfolio managers at
Boston-based Wellington Management Company LLC held a $135
million position in J.C. Penney at the end of February, only to
see the stock tumble this week on the implosion of ousted CEO
Ron Johnson's turnaround plan.
The fund initiated its position in J.C. Penney in the fourth
quarter and added to it during the first part of this year,
according to the fund's latest disclosures. Wellington portfolio
manager Saul Pannell declined to comment.
J.C. Penney shares are down 29 percent in 2013, including
the 11 percent drop on Tuesday trading on the New York Stock
Hartford Capital Appreciation wasn't alone, as
many other mutual funds jumped into J.C. Penney in the weeks
before the company's latest meltdown, U.S. regulatory filings
The Prudential Jennison 20/20 Focus Fund, for
example, recently bought 1.35 million J.C. Penney shares that
accounted for 1 percent of its assets, according to a fund
disclosure for the end of February.
Fortunately, none of the mutual funds appeared to make
outsized bets in relation to their assets, but their returns
will feel some pain from J.C. Penney. The big headache rests
with outspoken hedge fund manager Bill Ackman, whose Pershing
Square is J.C. Penney's largest shareholder, but he may be
At the end of February, Hartford Capital Appreciation
reported holding 7.7 million shares in J.C. Penney, or 1.2
percent of net assets. The fund was the second-largest mutual
fund investor in the retailer behind the Dodge & Cox Stock Fund,
which owned 11 million shares, according to Thomson
Hartford Capital Appreciation Fund, in its latest commentary
for investors, said its exposure to the discretionary consumer
sector increased in the fourth quarter "as a result of our
bottom-up investment process."
As a result, the fund established positions in J.C. Penney
and Priceline.com Inc. Priceline shares are up 12
percent this year.
The Hartford Capital Appreciation Fund is up 10.9 percent
this year and that performance puts it in the top 19 percent
among peer large-capitalization core funds, according to Lipper
Inc, a unit of Thomson Reuters.