by borsuks | November 26, 2016 10:14 am
Poster Stansberry Tease:
Let’s take the weakest player in the mall space. I’m talking about a major mall operator that can’t afford its existing interest expenses.
No, I’m not kidding. One company on our list has an equity value of almost $3 billion. Meanwhile, it can’t generate enough cash to cover its interest expense, assuming it’s going to spend anything to maintain its buildings. If you factor in the costs of merely maintaining its buildings, this company is only generating 30% of what it needs to pay interest. It is drowning in debt.
I wish I could tell you the whole story of how this happened. It’s the single most outrageous thing I’ve ever seen done in capitalism. It was the biggest farce in the history of retail.
As everyone should know, this company isn’t going to make it. Over the next three years, it must repay $2 billion in debt, including $300 million next year. Meanwhile… its traffic, revenue, and gross margins continue to fall, year after year.
There’s no way this company will avoid bankruptcy. But its stock is still worth $3 billion.
Any gumshoes have an idea who the mall operator is?
That makes no sense. And as soon as this company runs into a significant debt maturity, a lot more people are going to realize these facts. Overnight, the share price will collapse by 50% or more. If you’re holding puts here, you’ll make 10-20 times your money.
Source URL: https://sgumdev.stockgumshoe.com/2016/11/microblog-weak-mall-operator-to-short/
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