Columbia developer General Growth Properties has lost its listing in the Standard & Poors 500 index. This morning the stock was trading at $0.51 a share. There is wide speculation that a bankruptcy filing by the firm is imminent.
Who would want to buy this stock?
William Ackman. Bill Ackman and his private hedge fund, Pershing Square Capital Management, have been busy buying up shares of GGP since last fall when all of the news about GGP’s financial position was bad. The fund is now the largest individual shareholder in the company.
What is Mr. Ackman up to?
Basically he believes that the underlying real estate assets of the company are worth more than the stock. According to this story by Todd Sullivan on the blog Seeking Alpha,
“Bankruptcy usually leaves stock investors with plenty of nothing, but General Growth is an unusual case. It has almost $30 billion of assets on its books, and just about $27 billion of debt. But most of the company's real estate assets are recorded on its books at their historical value, and many were bought years ago, meaning their value now is likely substantially higher. The company's problems are not with its assets, but with refinancing maturing debt in frozen markets.”
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