It Was Bound to Happen. Reggie Middleton vs Ackman vs Hovde on GGP!

By: Reggie Middleton | Sun, Dec 27, 2009
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I am here to weigh in on the increasingly popular marketing battle over GGP's (General Growth Properties) value in, and out of bankruptcy. The players in question are large buyside institutions who own opposing positions on the stock. Ackman/Pershing square, who are long the company's stock, and Hovde Capital Advisors, who are short the stock, and Reggie Middleton, the original player!

For those who follow me regularly and are familiar with my dealings with GGP, skip down to the bottom of this post to download my latest GGP analysis. For those who are not familiar with me and the BoomBustBlog, I am (to the extent of my knowledge) the first investor/media concern to go public with a short thesis on General Growth Properties (GGP) with a warning on commercial property in general, and a specific short on GGP in the 4th quarter of 2007 (see "GGP and the type of investigative analysis you will not get from your brokerage house", BoomBustBlog professional subscribers can download the entire GGP composite history in .pdf format). I am a private investor that generates his own proprietary research. It is solid, independent, unbiased, and of extreme quality when compared to the highly conflicted sell side marketing fluff proffered as research, and apparently now stands out among the buy side as well. With all due respect to the successful investors referred to herein, there is a hint of "talking one's book" within the presentations. I have absolutely no problem with self promotion, but when it appears the promotion comes to odds with the validity of the analysis, it does tend to raise my brow, and apparently the brow of several institutions that have come to me for my opinion.

So, let's take an unbiased, empirical look at GGP from the guy who first pointed out the insolvency of this company in the first place. As for the self promotion aspect, I am now offering consulting services to those who desire independent, objective analysis. I will soon be releasing a very interesting study on real estate funds and residential mortgage related products from Morgan Stanley and Goldman Sachs, which will assuredly cause their clients to fall in love with them. More on that later, though.

GGP from the beginning

As stated earlier, I articulated a roadmap to the largest commercial real estate failure in history a full year in advance of its filing. General Growth Properties was picked to be the big shorting opportunity in November 2007, when it was the 2nd largest commercial mall owner in the country, trading above $50, with an investment grade rating and buy recommendations from Wall Street. It filed for bankruptcy a year and a half later.

The following links lead to an extraordinary body of GGP and CRE research which I released through BoomBustBlog.

The Commercial Real Estate Crash Cometh, and I know who is leading the way! 06 January 2008

Generally Negative Growth in General Growth Properties - GGP Part II 08 January 2008

General Growth Properties & the Commercial Real Estate Crash, pt III - The Story Gets Worse - 09 January 2008

More on GGP: A Granular View of Insider Selling and Lease Rate Growth 11 January 2008

GGP part 5 - The Comprehensive Analysis is finally here 19 January 2008

My Response to the GGP Press Release, which seems to respond to blogs... 21 January 2008

For those who were wondering what sparked that silly press release from GGP. 22 January 2008

GGP: Foreclosure vs Asset Sale 25 January 2008

GGP Refinancing Sensitivity Analysis 25 January 2008

GGP part 7 - Share value under the foreclosure analysis 31 January 2008

GGP part 8 - The Final Analysis: fire sale of prime properties 02 February 2008

GGP Conference Call 14 February 2008

Reader's legal observation on GGP 16 March 2008

Analysis of GGP's recent Q1 results 29 April 2008

GGP Can't Afford its Dividend 06 May 2008

Press release announcing new equity financing - 21 March 2008 something that I didn't explicitly model in my own analysis, but after reviewing information without the benefit of official documentation, there were no surprise nonetheless... 26 March 2008

• We did find some surprises, and my blog readers chimed in with their expertise and opinions...

12 April 2008

Our approach is to evaluate the total credit risk attached to the CRE portfolio by

1. Following a bottom up approach wherein each individual property is valued based on current cap rates and prevailing rentals;

2. Comparing the fair value of each property with outstanding mortgage to identify the pockets with high LTV, which can lead to losses on liquidation,

3. Factoring in the refinancing risk arising from short-to-medium term scheduled maturities.

The comparative analysis (Reggie vs Ackman vs Hovde) is available to the public here: Middleton vs Ackman vs Hovde on GGP - public edition 2009-12-26 20:41:50 1.50 Mb. The full comparative analysis with updated valuation is available to subscribers here: Middleton vs Ackman vs Hovde on GGP - subscription edition w. updated valuation 2009-12-26 20:43:17 1.51 Mb. You may click here to subscribe.



Reggie Middleton

Author: Reggie Middleton

Reggie Middleton

Reggie Middleton

Who am I?

Well, I fancy myself the personification of the free thinking maverick, the ultimate non-conformist as it applies to investment and analysis. I am definitively outside the box - not your typical or stereotypical Wall Street investor. I work out of my home, not a Manhattan office. I build my own technology and perform my own research - in lieu of buying it or following the crowd. I create and follow my own macro strategies and am by definition, a contrarian to the nth degree.

Since I use my research as a tool for my own investing to actually put food on my table, I can stand behind it as doing what it is supposed too - educate, illustrate and elucidate. I do not sell advice, I am not a reporter hence do not sell stories, and I do not sell research. I am an entrepreneur who exists just outside of mainstream corporate America and Wall Street. This allows me freedom to do things that many can not. For instance, I pride myself on developing some of the highest quality research available, regardless of price. No conflicts of interest, no corporate politics, no special favors. Just the hard truth as I have found it - and believe me, my team and I do find it! I welcome any and all to peruse my blog, use my custom hacked collaborative social tools, read the articles, download the files, and make a critical comparison of the opinion referencing the situation at hand and the time stamp on the blog post to the reality both at the time of the post and the present. Hopefully, you will be as impressed with the Boom Bust as I am and our constituency.

I pay for significant information and data, and am well aware of the value of quality research. I find most currently available research lacking, in both quality and quantity. The reason why I had to create my own research staff was due to my dissatisfaction with what was currently available - to both individuals and institutions.

So here I am, creating my own research for my own investment activity. What really sets my actions apart is that I offer much of what I produce to the public without charge - free to distribute and redistribute, as long as it is left unaltered and full attribution is given to the author and owner. Why would I do such a thing when others easily charge 5 and 6 digits annually for what some may consider a lesser product? It is akin to open source analysis! My ideas and implementations are actually improved and fine tuned when bounced off of the collective intellect of the many, in lieu of that of the few - no matter how smart those few may believe themselves to be.

Very recently, I have started charging for the forensics portion of my work, which has freed up the resources to develop the site to deliver even more research for free, particularly on the global macro and opinion front. This move has allowed me to serve an more diverse constituency, which now includes the institutional consumer (ie., investment turned consumer banks, hedge funds, pensions, etc,) as well as the newbie individual investor who is just getting started - basically the two polar opposites of the investing spectrum. I am proud to announce major banks as paying clients, and brand new investors who take my book recommendations and opinions on true wealth and success to heart.

So, this is how I use my background and knowledge in new media, distributed computing, risk management, insurance, financial engineering, real estate, corporate valuation and financial analysis to pursue, analyze and capitalize on global macroeconomic opportunities. I have included a more in depth bio at the bottom of the page for those who really, really need to know more about me.

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