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Unlike most people, Jeremy Phillips likes Warren Buffett as a businessman more than as an investor. In this video, Jeremy and Austin Smith talk about applying Buffett's business principles to J.C. Penney.
Austin quotes Buffett as saying, "When a manager with a reputation for brilliance takes a business with a reputation for poor fundamental economics, it's the reputation of the business that remains intact." This is the case with CEO Ron Johnson, who came to Penney from Apple. As Austin points out, Steve Jobs didn't have his reputation for brilliance back when he started the Apple Store. In contrast, Johnson came to Penney with a sterling reputation, but Penney has been around a lot longer than Johnson.
In short: Be careful when a white knight leader comes in, as it's not going to help a company with a dying reputation.
While J.C. Penney may be circling the drain, opportunities still abound. The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.