Tom Winnifrith Bearcast: Like Sir Arthur Cochrane I'm trapped by the past so can't buy more gold shares though I am sure I should
Sunday Long Reads: Drinking alone, Himalayan Hotspot, Fake Swedish Serial Killer, Walking Well, Killing Nortel
Covid-19 has changed the world. Well perhaps not the virus itself but the governmental response, which I continue to see as the biggest exercise in GroupThink madness the world has seen. But the change has come and a clear victim is Hammerson (HMSO), a heavily indebted owner of retail properties. Its last stated NAV was 601p, the shares trade at 84p. Either this is the cheapest stock going or something is so wrong that it could be horribly expensive...
We are all living and learning with investment. Actually we can pitch this more widely about life or - as Tom observed in his bearcast yesterday - into other areas such as grammar. On the latter I am still recovering from being educated at a comprehensive school in the 1980s where clearly the general Thatcherite revolution sweeping the country at the time, failed to raise standards. Clearly I must try harder.
I noted back in February that property group Hammerson (HMSO) had ludicrously turned down a Hail Mary bid approach - at approximately a 70% share price premium to the then share price - and was consequently (correctly) being hassled by activist investors. Roll forward five months and all of this counts for double with the shares driven lower by further property sector pessimism…
Well it has taken a few months but the sentiment I expressed back in December that Hammerson's (HMSO) proposed takeover of Intu (INTU) was 'shopping centre madness' has finally been agreed with - the former walking away from its bid. The reasons, however, are truly fascinating with the regulatory statement from Hammerson blaming that easy punchbag 'the equity market':
Bizarre news of the day among the larger cap stocks on Wednesday was undoubtedly the announcement that property behemoth Hammerson (HMSO) was buying shopping centre peer Intu (INTU) with a £3 billion+ all share (naturally) offer which creates a 'top three pan-European REIT' (real estate investment trust) with £21 billion of property baggage on its book. And, yes, you have guessed it, the transaction will be earnings accretive despite synergy levels (£25 million) that are more like a rounding error.
Hello, Share Throwers. They tell me that shopping centres are not in favour as much as they used to be. Perhaps it’s because we’re beginning to adopt the irritating American habit of calling them malls. But it’s more likely to be the advance of internet selling. However, the public will never abandon the strong British pastime of real shopping. And so I believe the present level of popularity will hold fast and may even improve. And it will if we ever, as a society, find ourselves with more leisure time. Technology hasn’t done the trick so far, but it might do.
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