peridotcapital

I think a really simple bear thesis is that it will be hard for equity holders to earn outsized returns if they are paying ~$100/sf (at the current $19 stock price) for a portfolio that: 1) Is less than 30% leased 2) Had development costs estimated at ~$150/sf before additional labor and material cost pressures recently surfaced 3) Generates sub-$20/sf rents on new leases It is hard to see how the equity will double or triple from here when your all-in starting cost today (current E/V plus future development spend) is probably pushing $275/sf (a 14x multiple on rent). The bear case really does not have to contemplate a bankruptcy or a forced restructuring of any kind.

Haha... Twitter strikes again. Just focus on the Form 4s that Eddie files. They clearly showed he owned 17M OP units at the beginning of the year. That figure is down to ~13.2M after some exchanges and LP distributions from his fund in 2021.

I believe any shares/units owned by SRG or its controlled entities would not show up in the fully diluted share count on the income statement. Not sure where people are miscalculating... perhaps they don't realize that Eddie owns shares/units personally, and ESL owns others indirectly on behalf of his LPs...

I think you are mistaken. From the 10-K: Common Shares and Operating Partnership Units On March 3, 2021, the reported closing sale price per share of our Class A common stock on the NYSE was $20.99. As of March 3, 2021, there were 38,903,146 Class A common shares issued and outstanding which were held by approximately 138 shareholders of record. The number of shareholders of record does not reflect persons or entities that held their shares in nominee or “street” name. In addition, as of March 3, 2021, there were no Class B non-economic common shares issued and outstanding and 17,002,906 outstanding Operating Partnership units (“OP Units”) held by limited partners other than the Company.

I think current FCF/share is real, no matter how they got there. And I think the multiple one assigns to it today should reflect the future growth outlook for said cash flow. If you are arguing that we should pay a lower multiple today because they have grown via M&A in the past (and are trying to do so in the future), okay fine, but there are plenty of companies that are serial acquirers and FCF per share stays stagnant deal after deal after deal (AT&T anyone?). If management is growing per-share FCF, I consider that real value creation regardless of method. Investors still have to pay an appropriate price for that value creation to make money on the investment. If adding HBO and Warner Bros makes their offerings more valuable to the consumer, I will gladly have Zaslav grow FCF per share via M&A over the next 5 years, and folks buying at 8x FCF should make nice money as a result. For those who paid 25x FCF in 2010 for a cable content company, well, their poor returns should have been expected.

Not sure I follow... the interest on incremental debt funding of M&A shows up in the numerator and any equity issued to fund M&A shows up in the denominator.

That's very interesting. Here in Seattle you can get internet only from them, but it's like $90. For $110-$120 you can get cable too, so the bundle is actually a good deal (my wife and I still watch plenty of cable). And then we add Xfinity Mobile for cell service on top of that and the value improves further. We end up paying Comcast about $160/month for cable, 400 mbps internet, and cell service on 2 smartphones. I can't find a materially better value anywhere else and the service has been problem-free across the board. But... I don't know anyone else who is doing the same thing so maybe we are their dream customer, but the exception.

Yeah, the narrative has been that cord cutting will continue at current rates unabated and they could not compete in streaming, so why not just buy Netflix stock? Of course, their customers love their cheap to produce non-fiction content and thus the content has remained valuable and generated ever increasing FCF per share. Adding HBO and Warner to that mix can only help. Similar story at AMCX, which is crazy cheap.

Discovery FCF: 2010: $0.72 per share 2020: $3.48 per share Yes, the stock has not mirrored that growth (multiple has gone from 25x to 8x) but I don't think you can argue that management has failed shareholders with respect to value creation. They can't control the multiple. It is entirely possible that 2025 FCF is $5 per share.

I think the issue with Macerich is the debt load of $173 per square foot. They own ~2x the space of SRG with ~5.5x the debt. I know that's not apples to apples given how much SRG space is not leased, but still, given both are extremely levered situations, SRG probably has more upside potential. FD: Don't own SRG common, just the preferred for my income-focused clients.

proforma share count will be around 2.26 billion.

They are guiding to 5x leverage at close and 3x 24 months later. If you want to value the new entity at 10x EBITDA, you would get $43.50 per DISC share in mid 2024. The better stat is that FCF is so robust that such a price is only 11x FCF (a 1x spread between those metrics is pretty rare) so buybacks will be huge, just as they have been at legacy Discovery historically. 12x EBITDA and 14x FCF gets you to $56 per Newco share by my math, which might be the high end/bull case.

People seem to be assuming that every user BABA counts is a consumer and every dollar spent would be considered "retail sales." Does anyone buy stuff to resell as a business over there? Could one person have 2 accounts (one for their personal purchases and one for their business)? I know plenty of U.S. folks who buy stuff wholesale on BABA and resell it at full retail in the U.S. so it seems likely people do that in China too. All in all, I'm not sure assuming every user is a retail consumer and every transaction is for a household is going to provide the full picture.

Isn't it only worth $300M to SRG if they do the entire project themselves? If they don't go that route (can't imagine they will, or even could), the fact that the total profit potential equates to $5 per SRG share is pretty meaningless, isn't it? And it would also follow that finding 8 mega projects in the SRG portfolio worth $300M each (which gets to you to the current E/V) is also shortsighted when considering the margin of safety on the stock... What if SRG sells the Dallas land for $75M and rolls that into a 12.5% minority stake in the entire project? Even if the development is worth $1B upon completion, the per-value to SRG is more like $2 per share because they are offloading the bulk of the costs (and hence the upside). This is generally why I think it is premature to argue that the entire E/V is covered by 5-10 sites. Sure, if they were to funding everything themselves at a good rate and could build these things out quickly, but that's not how these mixed use projects typically work out. They'll probably JV the hotels, the multi-family, etc.

I was surprised when I drove past the Redmond property in December. Just an abandoned anchor store with a chain link fence around the parking lot. Nothing going on at all... looks like it could have been closed 3 months or 3 years ago... casual bystander would not be able to tell.