Is Macy's a savvy distressed buy?
Is now the perfect time to buy Macy's? Like when David Tepper bought Bank of America for $3 a share back in 2008? Any thoughts or insight on this? Greatly appreciated.
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Let’s talk this through. Why is it a good buy?
Honestly, I was thinking about it because it seemed like the time of contrarian buy that seems intuitively illogical, but more than just hopefully optimistic. I'd point out the real estate angle, as their portfolio is very valuable, more than five times it current market capitalization, however, they are a owner-occupier retailer. More than that, if that is the only angle they can approach or justify their survival, it is a very dangerous play, on top of the liquidation complications. All in all, I want to hear everyone else's thoughts on this. But this is what comes to mind so far.
You wanna buy a holdout position with me? I got $25...I was thinking if we get enough people, we can do a loan-to-own strategy.
Lol
I don't touch retail even with a 10ft pole.
Have you been inside a Macy’s (not in NYC) in the past 5 years? I’ve seen enough to know I wouldn’t invest a dime. Let their slow bleed into oblivion continue.
Biggest winners are going to be the ones that others, to quote one commenter here, wouldn’t touch with a 10 ft pole.
Haven’t looked at Macy’s but to have a margin of safety I’d want a retail property to be trading around half of what consensus GAV was before the virus. That’s a tough standard, maybe I’d go up to 60%.
Seeing that Macy’s trades around 1/3 of EV, I’m going to guess that the discount to GAV isn’t much at all. This is totally back of the envelope but if they do 60% LTV on their buildings than NAV would be about 40% of EV so a market cap of 1/3 of EV doesn’t imply a big discount. Now of course there’s the operations but I don’t see much reason to assign any value to those at this point.
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