Using Veritas to Construct the "Per…

29-04-2017 Hits:82093 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:77729 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:77299 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:82045 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:78637 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:80931 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:47814 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:79639 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:79164 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:79712 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:84686 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:81636 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Looking at Lehman, the Doo Doo 32 regionals, et. al., it is safe to say that commercial real estate borrowing will be tough, to understate the situation... and from what can be seen below, it looks like GGP's stockholder composition bodes ominously for the stock performance if our predictions come to fruition. See GGP and the type of investigative analysis you will not get from your brokerage house for this blog's history with General Growth Properties. The info below was derived from the contribution of an astute BoomBustBlogger, and has not been completely verified by me or my staff, but he has proven himself in the past.
 
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The main conclusions of this post are as follows: 
  • Mutual funds are the primary holders of GGP right now.
  • For almost all holders of GGP, their GGP holding is a negligible % of their total AUM
  • In Q2 2008, we saw net buying from the top 13 holders of GGP stock
  • Looking forward, it appears that many of these mutual funds are experiencing redemptions and losses, while the firms with more concentrated bets on GGP have scaled back
  • Losses at FNM, FRE and LEH have been huge for these mutual funds, but small as a % of total AUM
  • Cohen & Steers, one of the big participants in GGP's equity raise, is now selling stock.
My interpretation of all this together is as follows - we haven't seen any negativity yet due to share ownership at institutions downshifting.  These guys have very little as a % of their total assets in GGP, yet as a whole, these guys represent most of the share ownership.  So selling off their positions in GGP won't really do much for them, as they don't have much to lose.  They are almost all mutual fund types who maximize assets under management as a goal in lieu of maximizing total return, thus tend to be reactionary, and are probably in GGP for the dividend without having done extremely detailed analysis.  As mutual funds they are also probably subject to headline risk.  They don't want to be associated with fraudulent companies. Should it come to light that GGP is way too levered, must cut the dividend, and/or may have taint of fraud being tossed around, they could very easily sell. To be clear, I am not accusing GGP of fraud in any way whatsoever, but several have approached me and the SEC with concerns of potential fraud regarding the last equity offering. The institutions are experiencing redemptions and losses themselves, which makes it less possible for them to hold, let alone buy more.  And the guys who have GGP as a larger % of their AUM are selling.  Overall, this bodes very poorly for the future stock performance.

Mutual funds are the primary holders of GGP right now

Below is a chart which shows the 13 major holders of GGP stock. 


They represent 55% of the stock, while all institutions account for 98% of the stock according to Yahoo Finance.  This is probably overstating ownership, but it needs to be noted that the CEO himself owns 23% of the outstanding stock through the General Trust Company vehicle.  Basically, it appears that the stock is virtually owned by management and these mutual funds.

For almost all holders of GGP, GGP holding is a negligible % of their total AUM

We can see this below:
This is understandable given the fact that most of the major holders are big mutual funds.  Only a few names stick out here that own more sizable %'s of their AUM - Cohen & Steers, Brookfield Redding, Adelante Capital, and APG Investments.  

These guys could be considered "smart money" - or perhaps, smarter money in the sense that they are more intimately familiar with GGP.  We can see, from below, that literally all 4 sold stock last Q: 
  • C&S sold 8.7% of their holdings
  • APG sold 11%
  • Brookfield sold 0.75%
  • Adelante sold 12%
GGP had sold off from 43 to 35 by that point.  We don't know how they have responded to last Q's earnings, after it has fallen to the 20's.  But this trading activity is not exactly heartening.


Closer look at Cohen & Steers

We had taken a closer look at C&S before.  They were one of the key participants in the equity offering I believe, and are a real estate-focused fund.  Below are their holdings and AUM over time:
Their AUM took a hit in 2007 but has since stabilized at $15B.  GGP was their 2nd biggest holding in Q1 08, but is now their 3rd largest.  Judging by the dividend yield of their top holdings, they do not appear to be investing purely for dividends.  
 
Cohen & Steers is no expert. They buy high yielding REITs it looks like, and just hope for the best. As can be seen in their 2007 annual report for their International Realty Fund, their Australian performance was dragged down by Centro - "Australia (–7.7%), a positive performer for most of the year, declined in December when Centro sold off on the announcement that it was unable to refinance A$2.7 billion of maturing debt, taken on to finance its aggressive acquisition program. Banks were unwilling to lend to the company because of its heavy reliance on off-balance sheet financing to acquire properties, its large debt load and its portfolio of second-tier American shopping centers."I don't know what is going through their heads, but they were also investors in Centro before it went bust.  I wouldn't pay them too much heed.


Closer look at Brookfield Redding

This was a peculiar name to see pop up. $2.2B in AUM, only 3 Q's of 13F filings. 

This shows their main corporate office: 
71 South Wacker Drive
Suite 3400
Chicago, IL 60606-2841


This is the main address for GGP:
110 N Wacker Drive
Chicago, IL 60606


According to Google Maps, they are 0.2 miles away from eachother.  I don't know if these guys are chummy chummy, but my sense is that GGP came to them with a detailed presentation and got them to make a big investment that is now turning sour.  


In Q2 2008, we saw net buying from the top 13 holders of GGP stock

On the whole, these institutions bought a net of 4M shares, or 1.5% of the SO.  We have yet to see downside from institutional selling (although what we are seeing now is probably at least partially due to institutional selling).


Looking forward, it appears that many of these mutual funds are experiencing redemptions and losses, while the firms with more concentrated bets on GGP have scaled back

We noted the latter part of this already.  The former is evident from this graph of the % change in AUM of most of the key institutional investors in GGP:
Some of the more notable declines are at FMR, Deutsche Bank, State Street, Wellington and Invesco.  These are big drops in the AUM.  Barclays and Vanguard are not doing nearly as badly.


Losses at FNM, FRE and LEH have been huge for these mutual funds, but small as a % of total AUM

Below is a chart which shows the $ losses from FNM, FRE and LEH for some major holders: 

AXA has taken by far the biggest hit, but FMR, Vanguard, State Street and Wellington are not too far behind.  Note that this chart assumes constant share ownership over the whole period.  This is not true, but is a simplified assumption.  

This chart which takes the above loss and divides it by the AUM currently:

Pzena and David Dreman have taken huge hits.  But as we can see, AXA and (wonder of wonders) Citi also had fairly sizable losses, all things considered.  The rest of these guys actually don't seem that negatively impacted.