Fishing for real estate value in the stock market
Macy’s faces pressure from real estate-focused activists.
Themes:
-- Undervalued stock.
-- Real estate worth more than the company.
-- Calls for a structural shake-up.
Barington Capital and Thor Equities argue Macy’s is sitting on up to $9 billion in real estate—more than its $7 billion debt and equity capitalization.
Barington's solution:
1. Form a real estate unit to unlock value.
2. Slash capex.
3. Aggressively buy back shares.
Macy’s leadership, under CEO Tony Spring, has a turnaround plan in motion trimming underperforming stores, expanding luxury brands like Bloomingdale’s and Bluemercury, and focusing on smaller formats.
Activists believe they can do more, pointing to Dillard’s success with leaner spending and shareholder returns.
The value of real estate (and every other asset) is in the eye of the beholder.
Shareholders of retail stocks don't value properties like real estate investors.
Disconnects between their perspectives occasionally create opportunities for:
...aggressive activists to create short-term value.
...and executives to lose their jobs (and their companies).
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