Member Info for Wigwammer

I really couldn’t care less whether he loses money or not. He adds little to my understanding of investments, that’s all.

Dear oh dear.. you’ve been dabbling in hmso and it’s gone **** up too... so that’s cwd, intu and hmso that have blown up in your face. You really should stop commentating here and take a little longer thinking about your own approach. Hope that helps :)

I have never posted on the Hammerson board. You have made another embarrassing mistake. At least we can agree you’re no analyst. Take care :)

Sain - after conceding you lost money in intu and cwd at multiples of the current prices, it makes sense that you stick to commentary rather than investment/analysis. Have a great weekend :)

Gewillia... “all attempts at valuation quite worthless...the expert valuations were worthless at the peak, and probably worthless now. that’s true.. but is the property worthless or just the people tasked to value it? What we can say with some certainty is that sentiment is very weak, and under those conditions, people are more inclined to act out of emotion than good sense. There will be investors out there with cash to spend, who can take a rather more calculated look at the likely medium term reality. It will only take one or two deals to get sentiment rolling in the other direction. ATB

Gewillia. Bear in mind that these days, the average punter is willing and able to go short. It’s been a profitable and growing business for the facilitators, and is most obviously evidenced on these boards by the growing number of naive derampers who repeat themselves day in, day out. I agree that care needs to be taken before buying here - it needs to be part of a portfolio. But when talking as negatively as you do - in a leveraged situation with many unknowns - you equally need to be cautious of encouraging shorters, IMO. To be candid - if someone can justify buying the Ritz for £700m, then they can justify paying £1.5bn for the TC, or a lot more - and that would leave a short position in a big mess. It is an interesting story you tell, but there are investment maxims which - when applied to a broader range of situations - can result in a positive outcome for those left holding. The one that springs to mind is “buy when there is blood on the streets”. Looking at the intu chart now - we can’t be far off that. Of course, many of these situations disappear - you lose 100%. Others go on and thrive, you make 500%+. Take a look at the history of EIG, POG, AAZ, SKP etc - all highly leveraged investments facing vast difficulties, that went on to multiply. Hopefully you hit enough of the good ones to compensate for the bad ones.. I think the 4p price here tells us a lot about sentiment, but perhaps less about the reality. There are discrete high quality assets here with good prospects trading at large discounts to peak, and sentiment can change quickly - which is why I sought to concentrate thinking on 2025. In the short term, markets are a voting machine and in the long term a weighing machine. Current markets have thrown up a lot - but not sure I’m quite as convinced as you about the general quality. FTSE is a lot of oil, commodities, retailers etc.. all a bit mucky.. versus an asset like the Trafford Centre?! No comparison. But I do like GOG, MARS, POG (still!)... and literally dozens of what I perceive as high risk/higher return names - intu included. Hope that helps and good to have an informed chat. Best wishes.

Thank you, Gewillia. That does answer the question. A couple of thoughts in return 1) the valuation of TC at £1.5bn is more than 35% below peak. FTSE is about 28% off peak. It’s a cliche I know, but investors like Bricks and Mortar. 2) Yes, shopping patterns are changing, but centres are also about entertainment - shops, restaurants, bars, cinema etc - the strong will benefit as the weak fail. TC and intu have prime assets 3) leftfield actions by “Deep Pockets” happen more frequently than predicted. I note over the weekend the Ritz was sold for half the price we’re touting for the TC. Strange but true. So I see a probability you are right, but a material chance these are worth substantially more - high risk, high return - but with an asymmetric payoff in the holders favour. Hence, I diversify across a broad range of such names and limit the risk in each one. It has worked well over time for me. Well done on your other investments. ATB

Brandes, Investec, Schroders, Jupiter, Fidelity also have meaningful positions. Whatever happens - it is unlikely they will just pass control over.

Its of no interest to me what you do, but thanks anyway :)

Many thanks for another thought provoking response, Gewillia. It certainly helps to add relevant numbers to analysis rather than emotive platitudes. I guess my immediate thought is - with all due respect - you haven’t answered either question posed. Is there a material chance that the TC is purchased for £1.5bn? Are there reasonable economic reasons for thinking a purchaser will be pleased in 5 years time? These are difficult questions to answer = but reasonable ones. If one is going to go on to a public board - where people may be influenced to sell or short shares at low levels - and suggest that intu is uninvestible then one needs to demonstrate why there is no material chance that the shares are worth more than they are now. With regard to your follow up - if a £1.5bn valuation is achieved, you state they will receive nowhere near that. Not sure what you mean. Post fees, they will likely get £1.4bn+. With that liquidity they can do all sorts of things. As you suggest - pay down the £700m debt due on TC. Repay debt early as required by covenants: £113m group asset level + £161m rcf + £34m group level rent = £308m. £1bn+ gross debt repaid. £392m net cash addition. The likelihood of cross default clauses being invoked under these circumstances - a fear which you do not quantify - reduces substantially for the simple reason that the leverage falls, equity ratio rises, and the liquidity position vastly improves. The remaining debt holders are in a happier place. Taking a further 20% valuation hit to the U.K. assets, or £900m, would still leave £700m net equity, or circa 50p a share for shareholders. In short, it is quite important to answer the questions posed above before encouraging people to act on sentiment because - if there is a material chance of such occurrence - you may be encouraging them to sell at the worst possible time. For clarity, I suspect the probability is this share is worth zero. But there is a material chance it is worth well north of 20p. It’s not black and white as some suggest, nor should people be encouraged to think it is. ATB

A little daft to suggest I’m twisting words, when I am simply referring back to the question I asked gewilla, and which he kindly chose to answer. Perhaps if you read the question gewilla is responding to, as opposed to just the response, you wouldn’t make yourself appear so silly. Best wishes :)

I think Gewillia is quite capable of answering for himself. But it is interesting that you feel the need to answer for him. ATB :)

Thanks Gewillia. So are you saying there IS a material chance that intu sell all or part of the TC for £1.5bn? If so, with an extra £1.5bn of liquidity, why will they have difficulty meeting relatively small covenant breaches on the other properties? Just to add a little of my own thoughts. The investment case here is very different at 5p, than it was at 55p, or 105p. Because at the higher levels of valuation the crystallisation of value from the TC stake would have meant relatively little in terms of shareholder upside. But if the valuation of TC is realised at anywhere near book value (£1.65bn) with the market cap at £55m, then the upside for holders (including whittaker) runs into 100’s of percent.... Sorry but I think your thoughts on mm’s misrepresent their role - they will simply be acting on the request of a fund manager, who may or may not know what he/she is talking about. If they are anything like coronation, or the property analysts that advised coronation, they may be an MM acting on poorly informed instruction. ATB

Also, with respect to MM’s everywhere - their expertise is in building relationships and finding liquidity. They are not usually your “go to” people when it comes to knowing the inside line on fundamentals and valuation. It is a little misleading to suggest otherwise to an audience where some people may not recognise the role of an mm.

Thanks Gewillia. Informative. Not trying to catch you out at all, but genuinely interested in your view. Is there not a material chance that someone bids £1.5bn for the trafford centre, or an equivalent valuation for part of it? And is there not also reasonable economic reasons for believing this investor will be pleased with the valuation outcome in 2025? With all due respect the industry you represent - it is precisely the professional valuers and institutional shareholders who just locked in losses at 5p - that ballsed up the valuations in the first place. Getting it this wrong does not make them fountains of wise prescience. ATB

In fairness, I doubt colonel is trying to buy lower. But I’m dubious about posters who spend too much time “balancing the opinion” on stocks they do not own. They are not doing it for altruistic reasons and when it persists, it all starts feeling a bit yuck. Pleased I’m not afflicted.

I suspect at the minute, debt holders do need to care a jot about shareholders. If they are seen to be taking advantage of Covid to advance themselves, they will attract the attention of authorities for unnecessarily encouraging a tightening of credit conditions, and may suffer reputational damage which limits the pool of institutions willing to write business with them in future. ATB

“Bond holders are not generous types. They do not care a jot for shareholders”... is this based on empirical evidence, or wholly reliant on some cliched view of what bond holders are about?

Fairdealer - in fairness, the 1929 crash did not see a policy response as immediate and on a scale to this one. Yes, people can sit in cash - but inflation may become an issue at some point - even cash has risks. ATB

You may be right, onlyagame. In the short term markets are a voting machine, in the long term a weighing machine. This is a high risk position, but the technicals look attractive, valuation looks attractive, they have some valuable assets.. so I’m happy to own and sit it out. ATB