Source:  J.C. Penney

When it comes to a turnaround situation, it's rarely a good sign when an executive or a high net-worth investor leaves. In the case of J.C. Penney (OTC:JCPN.Q) last week, we got news of both.

The drama continues
J.C. Penney is no stranger to drama. As the company has struggled to turn itself around, it has been criticized for poor marketing, operations, shareholder communications, and even a misleading Valentine's Day sale.

With its V-day "sale," the retailer has been accused of artificially hiking prices early on so that it could later mark them down and offer a "huge discount" for marketing purposes. That honestly doesn't seem like that bad of an idea, but it generated a bit of negative press and the results remain to be seen. Given the terrible weather, don't expect much fireworks on that move anyway.

Billionaire dumps millions
The first of the two in the latest J.C. Penney exodus is billionaire George Soros. While he may not necessarily be the world's leading fashion guru in terms of judging the company's product line, he has done rather well over the years as a result of hard analysis. Apparently, he's not liking what he sees in the J.C. Penney turnaround.

In a form 13F filing with the SEC filed on Feb. 14, George Soros revealed his holdings on Dec. 31, 2013. As of that date, he owned around 13.8 million shares of the company. This is down from the almost 20 million shares he owned three months earlier so it is a 31% reduction. This may be the beginning of a full exit. Would it honestly surprise you if we come to learn that he's dumped the rest with the next filing in three months?

Source: CNBC

The numbers guy doesn't seem to like the numbers
Then in a press release on the day before Valentine's Day, J.C. Penney revealed that CFO Ken Hannah will be taking a hike as of March 24. Stuff happens, and maybe the exit is not because of anything bad, but Hannah didn't have anything to say in the press release itself. There was no "I wish to thank the board" or "I'm still confident in the future" speech.

The good news is that the press release was very flattering toward Hannah, and he didn't suddenly storm out but rather he gave ample time for a transition to get his replacement up to speed.  

It could be much worse
While it's rarely a sign to celebrate when a CFO of a company you invested in quits, there are certainly worse situations that can occur when a CFO leaves such as what was seen with KiOR (NASDAQ: KIOR) and Ruby Tuesday (NYSE:RT)

With KiOR, its then-CFO John Karnes gave his resignation notice and *poof* two days later he was gone. There was no replacement lined up for him, no transition period such that Hannah gave, and no positive press release praising him for his work. KiOR is in the biofuel business, so it's much different than J.C. Penney, but it is also a company struggling to turn itself around and survive. At least the departure of Hannah from J.C. Penney is a bit more organized.

Then there is the restaurant chain Ruby Tuesday. Like J.C. Penney, the company is struggling with a shrinking cash balance, declining sales, and continued net losses. 

Source: Ruby Tuesday

 With Ruby Tuesday, two executives quit within the same week, one a senior VP and the other the chairman of the board. Even worse, the chairman of Ruby Tuesday sold almost all of his shares in the open market at around the same time as his departure. We see no evidence of Hannah doing that, at least not yet.

Foolish final thoughts
Although I'm personally very skeptical of J.C. Penney's turnaround actually succeeding, the decisions by Soros and Hannah to leave aren't necessarily in and of themselves reasons for Fools to sell and certainly not to short the company. Whether J.C. Penney will turn itself around successfully still remains to be seen. That being said, even minor events or uncertainties such as these add to the growing piles of concerns for the company. Fools should continue to watch J.C. Penney with extreme caution.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.