Bill Ackman's General Growth Properties Rebuttal: A Detailed Response To Hovde's Short Thesis ~ market folly

Tuesday, December 22, 2009

Bill Ackman's General Growth Properties Rebuttal: A Detailed Response To Hovde's Short Thesis

A week or so ago we posted up hedge fund Hovde Capital's short thesis on General Growth Properties (GGWPQ). Immediately following that, we saw Todd Sullivan over at issue a rebuttal. Hedge fund manager Whitney Tilson of T2 Partners also issued a rebuttal. And finally, you now have one of the largest shareholders in Bill Ackman issuing a rebuttal on behalf of his hedge fund Pershing Square Capital Management.

In summary, Ackman has provided a wide range of GGWPQ's equity value based upon fellow REIT valuations. He comes up with a price target of $24-43 per share which excludes the MPC segment of General Growth. He feels that high quality US malls will continue to do well and he even recently laid out an entire presentation on the US mall REIT industry. Ackman and Pershing Square are obviously refuting Hovde's presentation since they have been long the equity and unsecured debt of General Growth since back when the stock was trading below $0.40 per share. You can see Pershing Square's original GGWPQ presentation from when they first entered the name.

General Growth has been evaluating all options to reduce leverage and have been considering "all indications of interest in the company." Ackman sits on the board of General Growth and obviously has been very close to this entire situation.

Entitled 'A Detailed Response To Hovde's Short Thesis on General Growth Properties,' below you will find Pershing Square's entire presentation, with a big hat tip to Todd Sullivan's ValuePlays for posting it up first:

You can download the .pdf here. It is clear the bulls are protective of this name, especially given that some of Hovde's analysis was labeled as questionable. Since hedge fund Hovde's short thesis presentation hit the internet, we've now seen three in-depth responses arguing against them.

The bulls clearly believe they've found a winner in GGWPQ. And, you can't fault them. Shares have risen from under $1 now to above $10. As General Growth Properties emerges from bankruptcy, the one question on everyone's mind is: how much is GGWPQ equity worth? We'll have to wait and see, but there have been plenty of educated guesses, that's for sure. For more on their bullish stance on GGWPQ, check out hedge fund Pershing Square's entire presentation on the US mall REIT industry. And of course, here's their original GGWPQ presentation.

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