This is an interesting conversation regarding General Growth (GGWPQ) and the DIP financing drama currently unfolding. He also owns $177 million of unsecured debt.
Of course CNBC has the wrong ticker for the company on its chart.
Disclosure (“none” means no position):
Today is Ackman’s “Town Hall” Meeting on his board slate regarding Target (TGT)…
Disclosure (“none” means no position):none
so Davidson has a response and a take on the constant fretting about the “frothy” market and the upcoming sell-off they fear/predict. NOTE: I am one of those “fretters” although not shorting….just not buying
The genesis of this was a recent article in Barron’s that said in part:
HOW MUCH WOULD YOU PAY, IN ROUND NUMBERS of unmarked bills, for a quick 10% retreat in the Dow? For the kind of 10% correction that was a thing to be feared when we went a couple of years without one, but now would make it easier for an investor to buy stocks that are up 40% from their lows, stocks for which there seemed no rush to own just two months ago?
Most investors, especially those long-only pros who grapple a benchmark for a living, seem to wish for a fleeting drop of 10% or more to provide psychological cover for entry.
More staunchly bearish folks — among them those who, based on the latest exchange data, have been reloading short positions — want that 10% as a small down payment on the resumption of the bear’s dominance.
The rest of us just pray for the wisdom to know the difference should such a pullback arise.
Strategist Jason Trennert of Strategas Partners sums up a common stance: “Simple valuation analysis leads us to be skeptical about the potential of the market to rally from these levels. The problem, it seems, after spending the last week on the road and looking at recent short-interest data, is that we have a lot of company — very few of our clients believe the rally is real.”
John Roque, the technical strategist at Natixis Bleichroeder who has been in synch with the rally and the preceding collapse, detects an upside “breakout” on the chart of investor frustration, because they have doubted the rally and owned too little of the stuff that has run the most.
The blogger sentiment poll on Birinyi Associates’ Ticker Sense blog (http://www.tickersense.typepad.com) last week showed 50% bears to 33% bulls — almost as many bears as at the early-March lows. In late January, just as the market was ready to roll over hard, 65% of the bloggers were bullish.
Other sentiment indicators are leading Ned Davis Research to get behind the idea that “a monster rally could continue within this secular bear market.”
This remains a net positive for the market, the idea that investors (and financial columnists, it should be said) continue to “fight” this move. Sure, they (and we) have been fighting it with some plausible ammunition: the slipshod quality of the leading stocks, the massive speculative volumes in stock options, the spike in corporate-insider selling, the fatigued look last week of the recently indomitable Nasdaq index. These characteristics can, and would, accompany both a doomed head-fake rally and something larger, for sure.
Of this think, Davidson opines:
“This is the type of article that imparts a great deal of information without being definite. From this I get that there appears to be great concern amongst many noted investors, esp. technical types, that a correction is due and most have invested in anticipation of a correction to what appears to be obvious over zealousness by current market participants. I don’t invest trying to catch short-term dips. My time perspective is a business cycle with the goal of adding fresh capital during the down portion of a cycle and removing capital during the up portion.
Reading of the angst of traders not knowing what to over the short term leaves me in a positive frame of mind, knowing that their stance in the market will add additional buying pressure when there is additional recovery in the business cycle.
For business cycle investors this is a bullish environment.”
Disclosure (“none” means no position):
Optimism, PIPP Explained, Gas, Energy
– I disagree, in the interest of full information
– Nice compilation here
– Let’s hope so
– A great article on the debate
Disclosure (“none” means no position):
From nationalization to terrorism, social revolutions to government regulations, sudden political changes can generate acute economic reverberations in markets and investments across the globe. In this video interview, Ian Bremmer discusses the value of developing business strategies that help companies and investors limit their risk exposure to these shocks. He also shares political risk–management lessons from his new book, The Fat Tail: The Power of Political Knowledge for Strategic Investing, cowritten with colleague Preston Keat. Bremmer, the president and founder of political-risk consultancy Eurasia Group, spoke with McKinsey’s director of publishing, Rik Kirkland, in Eurasia Group’s New York office in March 2009.
Disclosure (“none” means no position):
See some signs of hope in dark economic times as panelists explore some of the mind-boggling innovations that are changing our lives and can shape the future of the country. Even in the midst of economic free fall, there are signs of hope.
As of January 2009, the United States has built a flying car, found ways to turn algae into fuel, synthetically reproduced organs, had face-to-face conversations with people on the other side of the planet, and built robots to do our house cleaning for us.
Tune in to find out how some of the smartest people in California are trying to innovate us out of disaster.
Disclosure (“none” means no position):
MidAmerican Energy Chairman David Sokol gives the administration a failing grade on cap and trade. For those who do not know who Sokol is, he very well may be one of the successors to Berkshire’s (BRK.A) Warren Buffett
Disclosure (“none” means no position):None
Let’s do the math, $8.25 billion raised in a week (through debt and equity offerings). No Dow Ag sale and the stock is up 16% from this week’s lows. Can we put the talk of selling it to bed forever now?
The release:
The Dow Chemical Company (NYSE: DOW – News) today announced that on May 7, it priced a $6 billion underwritten public offering of debt securities, including $1.75 billion aggregate principal amount of 7.6% notes due 2014; $3.25 billion aggregate principal amount of 8.55% notes due 2019; and $1 billion aggregate principal amount of 9.4% notes due 2039.
Of the $6 billion in notes to be offered, $1.35 billion aggregate principal amount of the 8.55% notes due 2019 will be offered by accounts and funds managed by Paulson & Co. and trusts created by members of the Haas Family. These investors received notes from Dow in payment for 1.31 million shares of Dow’s Perpetual Preferred Stock, Series B, at par plus accrued dividends. Dow will not receive any of the proceeds from the sale of notes by the selling noteholders.
Dow intends to use the net proceeds received from the offering for refinancings, renewals, replacements and refunding of outstanding indebtedness, including repayment of a portion of the Company’s term loan borrowings.
Together with the common stock offering which priced on May 6, the over-allotment option which was exercised on May 7, and upon consummation of this debt offering, Dow will retire all remaining Perpetual Preferred Stock, Series B from the Company’s capital structure. Eliminating these shares is immediately and significantly accretive to net income available for common shareholders. Dow will not receive any of the proceeds from the exercise of the over-allotment option.
“Today, we announced yet another oversubscribed offering – the second one this week,” said Andrew N. Liveris, Chairman and Chief Executive Officer. “Coming on the heels of a very successful equity issuance, this bond offering clearly shows investor confidence in the Company’s strategic direction and our ability to generate significant value over the long-run. And with a substantial amount of proceeds going to pay down our term bridge loan well ahead of our plan, this is further evidence of the Company’s commitment to financial flexibility and maintaining an investment grade rating. The success of our equity and debt issuances this week also allows us to make the right decisions for our shareholders on the assets we will dispose of, the timing of these dispositions, and their valuations.”
Disclosure (“none” means no position):
I love the quote at the end, “A nation that is afraid to let its people judge truth and falsehood in an open market is a nation that is afraid of its people” John F. Kennedy.
Greenlight_Capital_-_Q1_2009 – Free Legal Forms
Disclosure (“none” means no position):
For those who don’t know and are afraid to ask. Thought this does a good job explaining it.
Capital structure from Marketplace on Vimeo.
Disclosure (“none” means no position):
Still no need to sell Dow Ag. Liveris is correct in saying that at $15, as constituted and with plan to rid itself of many of their commodity businesses, shares are a good value. That being said, the the current constitution is drastically altered, that may not be the case.
The Dow Chemical Company (NYSE: DOW) announced today that on May 6 it priced a public offering of approximately 130 million shares of its common stock at a price to the public of $15.00 per share.
Total potential gross proceeds to Dow and the selling stockholders from the offering is approximately $2.25 billion, including an over-allotment option of 15 percent.
Of these shares, approximately $1 billion in gross proceeds will be through shares offered by Dow and $1.25 billion (including over-allotment shares) will be through shares offered by accounts and funds managed by Paulson & Co. and trusts created by members of the Haas Family.
Excluding the over-allotment option, the Haas Trusts and the Paulson funds are each selling $454.4 million of their shares of Dow’s Perpetual Preferred Stock, Series B to Dow for the shares being sold by them in the offering.
“This over-subscribed equity issuance, and the clearing price of fifteen dollars per share, shows the strength of the Dow name in the equity markets,” said Andrew N. Liveris, Chairman and Chief Executive Officer. “In addition, by retiring more than $900 million of perpetual preferred in our capital structure, we have created a significant de-leveraging event that at the same time is meaningfully accretive to common shareholders.”
The clearing price represents a 1.3 percent decline from the closing price on May 6 of $15.19, and an 8.1 percent decrease from the closing price on Tuesday, May 5 of $16.33.
Disclosure (“none” means no position):Long DOW
Some great information in here regarding tenants, lease schedules and debt schedules
Disclosure (“none” means no position):
There is a lot here so I will try to make it easy.
Here is the basics:
General Growth Properties, Inc. (the Company) released today its first quarter 2009 operating results. For the first quarter of 2009, Core Funds From Operations (Core FFO) per fully diluted share were a loss of $0.38, Funds From Operations (FFO) per fully diluted share were a loss of $0.52 and Earnings per share – diluted (EPS) were a loss of $1.27. In the comparable 2008 period, Core FFO per fully diluted share were $0.74, FFO per fully diluted share were $0.73 and EPS were $0.01. The declines in Core FFO and FFO are primarily attributable to provisions for impairment, termination income and restructuring costs related to the development of alternatives to address our current liquidity and financing situations.
Got it? Good, now ignore it, all of it. I included it so as to not be accused of glossing over the reported numbers. Ignore it.
What do we really want to know? What is the health of the malls looking like? Earnings from here on out are going to be impacted negatively by various restructuring costs so they are not going to accurately reflect the health of the business. For that we need to go to the NOI or “net operating income” section.
Here it is:
Retail and Other Segment
NOI for the first quarter of 2009 was $608.6 million, a decrease of approximately 4.1% from the $634.5 million reported in the first quarter of 2008. Minimum rents in the first quarter of 2009 declined approximately $2.7 million as compared to the same period of 2008 due to the 2008 sale of three office buildings and two office parks. Temporary tenant revenues, other revenues (including sponsorship, vending, parking and advertising) and overage rents declined in 2009 due to decreases in occupancy and the overall weakness of the retail economy. Weaknesses in certain of our tenants’ businesses also led to an $8.6 million increase in our provision for doubtful accounts in 2009 as compared to 2008.
In addition, other revenues declined in 2009 due to a loss on sale of outparcel land of $3.9 million whereas 2008 had outparcel sales gains of approximately $4.3 million.
- Revenues from consolidated properties were $ 757.6 million for the first quarter of 2009, a decline of 5.1% compared to $798.3 million for the same period in 2008. The majority of this decline is due to the items impacting FFO discussed above.
- Revenues from unconsolidated properties, at the Company’s ownership share, increased to $152.1 million or 3.8% compared to $146.6 million in the first quarter of 2008. This increase was primarily due to the completion and commencement of operations at the Natick Collection in 2008.
- Total tenant sales declined 6.1% and comparable tenant sales declined 6.7% in 2009, both on a trailing 12 month basis, compared to the same period last year.
- Comparable NOI from consolidated properties in the first quarter of 2009 declined by 4.4% compared to the first quarter of 2008. Comparable NOI from unconsolidated properties at the Company’s ownership share in the first quarter of 2009 increased by approximately 3.7% compared to the first quarter of 2008. In the aggregate, comparable segment NOI decreased 3.3% as compared to the first quarter of 2008.
- Retail Center occupancy decreased to 90.9% at March 31, 2009, compared to 92.5% at December 31, 2008 and 92.7% at March 31, 2008.
- Sales per square foot for first quarter 2009 (on a trailing twelve month basis) were $427 versus $438 for the fourth quarter 2008 and $460 in the first quarter of 2008.
Results here have deteriorated a bit as one would expect given current economic conditions. But, the declines were in the 3%-5% range, occupancy rates are still 91% and sales per square foot have fallen just 7% from last year, a much smalled number than would be expected given the economic carnage that has happened since last spring.
In short, operations are holding up well.
Disclosure (“none” means no position):Long GGWPQ
Solid quarter considering what happened in Q4 2008. The key here is the 30-50 feature still expected for 2009. It also means year results will be heavily weighted to the backside. Investment thesis unchanged by these results. Book value =$11.55 a share vs $3.34 share price
Results:
“We are enthusiastic about our prospects for 2009 as market signals suggest that our cost value proposition continues to hold its appeal,” said Robert Halmi, Jr., President and Chief Executive Officer of RHI Entertainment, Inc. (RHIE) “This quarter shows that we are effectively managing our operations, bolstering our relationships with key broadcasters and cable networks, and solidly positioning our company for growth. We also remain committed to meeting our longer-term objectives of paying down roughly $200 million in debt over four years, continuing to monetize our library, reducing overhead, and further diversifying our product mix through series programming, all of which will serve to strengthen the underlying fundamentals of our business.”
Mr. Halmi continued, “Our financial results for the first quarter reflect the natural seasonality of our business as the majority of our revenue is booked in the second half of the year. As we expected and planned for, the unfavorable market conditions that we experienced in the fourth quarter of 2008 carried over into 2009. The good news, however, is that demand for original movies and mini-series and library content from broadcast and cable networks began to come back on line in January. Since that time, we have ramped-up our production and sales efforts accordingly. Production orders from NBC, Sci-Fi, Spike and Lifetime give us confidence that we are on track to deliver a solid slate of 30 – 35 films this year. Additionally, our recent trip to Europe for the annual international MIP sales conference gives us confidence that our library remains in high demand from customers looking for high quality and attractively priced content.”
Three Months Ended March 31, 2009
Total revenue for the three months ended March 31, 2009 was $13.0 million, a reduction of 41 percent from $22.2 million in the first quarter of 2008.
Library revenue decreased 25 percent to $13.0 million in the three months ended March 31, 2009, versus $17.3 million in the first quarter of 2008. The decrease was largely due to the weak market for television content purchases in the fourth quarter of 2008, which reduced the Company’s ability to recognize library revenue in the first quarter. RHI began to see a ramp-up in demand for library content during the first quarter.
Also contributing to the decrease in library revenue was a $1.5 million reduction related to the distribution of programming on ION during the three months ended March 31, 2009 compared to the prior year period as a result of a weakened advertising market.
There was no production revenue during the first quarter of 2009, compared to $4.9 million in the prior year period. RHI significantly slowed down its production activity in the fourth quarter of 2008 due to the difficult economic conditions and did not begin any films for the 2009 slate during that quarter. As a result, no original MFT movies or original miniseries were delivered in the first quarter. This compares to five MFT movies delivered during the comparable period in 2008. The Company has since ramped-up its production process in response to increased demand beginning in the first quarter of 2009 and at present, there are eight mini-series and eighteen MFT movies in various stages of production, most of which will be delivered this year. For the full year 2009, the Company expects to deliver a slate of 30 – 35 films.
Cost of sales for the three months ended March 31, 2009 was $13.4 million, compared to $17.6 million during the comparable period of 2008. The decline in the gross profit percentage was primarily driven by costs associated with minimum guarantees under the ION arrangement and distribution expenses. The lower revenue in the first quarter of 2009 covered less of these fixed costs, resulting in the decline in the gross profit percentage. It should be noted that while the rate of margin on library revenue recognized in the quarter decreased slightly, due to the mix of films, the Company has no reason to believe that the full year margin on the 2009 slate and library product will not be consistent with prior years.
Selling, general and administrative expenses decreased $1.9 million to $11.0 million in the three months ended March 31, 2009, from $12.9 million in the same period in 2008. A significant portion of this reduction relates to severance costs incurred in the prior year period, offset by costs associated with operating as a public company. The Company has however, begun to see the benefits of its continued focus on tightly managing its overhead costs.
The Company reported a loss on Adjusted EBITDA of $34.3 million for the three months ended March 31, 2009, compared with a loss of $15.2 million in the first quarter of 2008, largely driven by decreased revenue and a ramp up in production spending during the first quarter of 2009.
Net Loss for the first quarter of 2009 totaled $12.7 million, compared to a loss of $20.2 million in the same period of 2008. The Net Loss in the first quarter of 2009 reflects the $9.3 million in non-controlling interest in loss of consolidated entity. Loss per share for the three months ended March 31, 2009 was $0.94.
Disclosure (“none” means no position):Long RHIE