HHC - Howard Hughes Corp

[BG2008]

I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

 

Are you really long BYND?

 

How could I not be long a fake meat company that speaks to all the cool new kids with zero barriers to entry?  Yes, it's a trend, but they can grow sales, at OMG like 30% a year, who wants to own a bunch of dirt in Texas and Nevada where all those ignorant people live?  I mean meat without having to slaughter animals versus over 10mm sqft of buildings, 6.2 mm more sqft of condo development in Hawaii, and the South Street Seaport that they are having trouble leasing up?  What would I want to own?  You know the answer.  Yeah, I mean the NOI of the HHC is more than the revenue of BYND meat, but who cares?  BYND is disruptive and of course

 

#Patties_Over_Seaport_All_Day 

#Save_The_Cows 

#It_Bleeds_Like_A_Murder_Burger

#Disrupt_Meat 

#Like_Meat_But_More_Expensive

#Demand_Outpacing_Supply

#169%_YOY_Growth

[merkhet]

I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

 

Are you really long BYND?

 

How could I not be long a fake meat company that speaks to all the cool new kids with zero barriers to entry?  Yes, it's a trend, but they can grow sales, at OMG like 30% a year, who wants to own a bunch of dirt in Texas and Nevada where all those ignorant people live?  I mean meat without having to slaughter animals versus over 10mm sqft of buildings, 6.2 mm more sqft of condo development in Hawaii, and the South Street Seaport that they are having trouble leasing up?  What would I want to own?  You know the answer.  Yeah, I mean the NOI of the HHC is more than the revenue of BYND meat, but who cares?  BYND is disruptive and of course

 

#Patties_Over_Seaport_All_Day 

#Save_The_Cows 

#It_Bleeds_Like_A_Murder_Burger

#Disrupt_Meat 

#Like_Meat_But_More_Expensive

#Demand_Outpacing_Supply

#169%_YOY_Growth

 

You've never met BG2008 in person, have you? :P

[Guest Schwab711]

I have and I get he likes RE. The borrow is 160% and he was talking about demand in the BYND thread. Maybe all his posts on BYND were sarcastic and I only took half of them as sarcasm.

[BG2008]

I have and I get he likes RE. The borrow is 160% and he was talking about demand in the BYND thread. Maybe all his posts on BYND were sarcastic and I only took half of them as sarcasm.

 

Schwab,

 

Just so that there is no confusion.  I am long HHC in a HUUUGE way and the BYND comments are 99% sarcasm.  I do get why the younger kids want the product.  It is more of a poke at the valuation discrepancies of what you own via HHC versus BYND on a look through basis. 

[merkhet]

I was maybe 98% sure you were kidding about BYND and 2% contemplating whether I needed to hop on a flight to NYC to stage an intervention :)

[Deepdive]

If HHC is worth $150-200 as others have mentioned, it seems like there is still good value here

[Liberty]

http://yetanothervalueblog.com/2019/07/quickie-idea-did-hhc-teach-us-anything-about-other-landbanks-joe-cto.html

[Ballinvarosig Investors]

The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

 

I don't own HHC and never will, but is it really the most over-valued company in America?

[Gregmal]

The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

 

I don't own HHC and never will, but is it really the most over-valued company in America?

 

Theres always some jerk off somewhere, trying to have his Big Short moment or get his 15 minutes of fame. I get how one can find ways to not like HHC, but in every way, shape or form, you can not dislike HHC, without finding SRG as an even more egregious example of all that one would be turned off by with HHC.

[Spekulatius]

The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

 

I don't own HHC and never will, but is it really the most over-valued company in America?

 

Well, he has a bunch of short positions, which I think were initiated at 1% each for modest has created a 0.25% portfolio drag, which is hardly earth shattering. Tobias ZIG fund more or less mechanically screen for the cheapest EV/ EBIT stocks,

(He calls the ratio acquirers multiple) and the short are picked from the inverse high EV/EBIT multiple. It might be totally mechanical (I am not sure), but it certainly wasn’t a concentrated short big position. I guess his screening method totally ignores NAV too.

[BG2008]

Does he overlay a qualitative aspect to his screening.  Joel Greenblatt's magic formula will sometimes return results like the BP Prudhoe Bay Royalty Trust that has very high margin but should be valued on a DCF basis. 

[Spekulatius]

Does he overlay a qualitative aspect to his screening.  Joel Greenblatt's magic formula will sometimes return results like the BP Prudhoe Bay Royalty Trust that has very high margin but should be valued on a DCF basis.

 

I don’t think he does, because his approach is based on mechanical screening. His approach is indeed related to Greenblatt‘s “Magic Formula”, which uses EV/EBIT and Return on capital, expect he only uses EV/EBIT. Tobias claims that his simpler formula actually works better than Greenblatts magic formula in backtests.

 

Tobias Carlisle is active on Twitter and has a pretty good podcast You can ask him directly, if interested.

[Liberty]

I don't think this needs to be personalized in a negative manner. HHC has thousands of investors long and short, I'm sure.

 

If Tobias has been short for even just a year, he's not lost anything, as the stock is now just back to where it was not long ago.

[CorpRaider]

It's not just a naïve ev/ebit screen (he's got financials in there, for example).  There's a lot of info in his books and he has appeared on several podcasts to discuss the strategy.  I think, however, after learning from Einhorn, I've got an absolute zero shorting policy in all investing. 

[KJP]

Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

 

[Gregmal]

Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

 

Ouch. Talk about a let down.

[KJP]

Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

 

Ouch. Talk about a let down.

 

Yes, I expected more.  Ackman has lauded Weinreb and Herlitz for years.  I guess they weren't on board with his plan. 

 

Here's the presentation for today's 5pm call:  http://www.snl.com/interactive/newlookandfeel/4265772/Transformation-Plan-Release.pdf

 

I love this from slide 5's description of the new CEO:  "Culture carrier and collaborative leader"

[Gregmal]

Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

 

Ouch. Talk about a let down.

 

Yes, I expected more.  Ackman has lauded Weinreb and Herlitz for years.  I guess they weren't on board with his plan. 

 

Here's the presentation for today's 5pm call:  http://www.snl.com/interactive/newlookandfeel/4265772/Transformation-Plan-Release.pdf

 

@$100 its interesting again, but just like a lot of other public RE, its cheap but so what? Now you have no catalyst and the dreaded "they shopped for a deal and couldn't find something that worked" overhang... will be keeping an eye on this for sure. But damn, theres so much in this market that either falls into the category of really cheap but dead money, or super expensive and risky. Hard to find anything in between.

[thepupil]

I bought small position $90-$97 starting in late 2018, sold 1/3 of shares after strategic announce, will be a buyer again L90's and average down. hard to believe the upside/more bullish estimates of NAV if they shopped assets and this is the plan they came up with. 

 

In some ways, this is exciting as HHC was a toehold for me and now it has potential to become a real position, but I have the least confidence in the NAV here of all the other real estate stuff because it has the most variables. 

[Gregmal]

I bought small position $90-$97 starting in late 2018, sold 1/3 of shares after strategic announce, will be a buyer again L90's and average down. hard to believe the upside/more bullish estimates of NAV if they shopped assets and this is the plan they came up with. 

 

In some ways, this is exciting as HHC was a toehold for me and now it has potential to become a real position, but I have the least confidence in the NAV here of all the other real estate stuff because it has the most variables.

 

Unfortunately, having seen and been apart of enough of these over the years, thats the narrative that is going to take a long time to get rid of. No more mystery about NAV, just a ceiling now quite a bit below what many thought.

[thepupil]

could you lay out some examples?

 

Public RE at prices below NAV comprises 25-50% of my portfolio and like 80% of my COBF posts and I think I follow the space a fair bit. Other than Forest City coming in at $24 later than expected when I thought it'd be $30 or FOR getting taken out for less initially (but then subsequently bumped significantly), I can't really think of ones that came in way below generally thought NAV levels.

 

In other words, I feel like as long as one hasn't been that aggressive, it's been a pretty profitable place to be.

 

What have been the major disappointments you've seen? NYRT?

[Gregmal]

The first couple that come to mind were PICO, NYRT and CTO. After that there's a few others that escape me at the moment but with similar stories. Maybe Northstar at some point IIRC. FOR was rather unique but I dont think they really ran a process as much as they got one bid which led to another. It just seems that the public market overestimates the values of these things and the time it takes for things to play out.

 

EDIT: Forgot UCP as well, maybe lumped that with PICO, but that was supposed to go in excess of NAV and went maybe 5-8% below as well. But that also did get sold, whereas Im mainly referencing companies perceived to have high NAVs that then went on the block and didn't end up getting deals done.

[Foreign Tuffett]

Page 11 of the presentation, "Non-Core Assets"

 

"2007 Gulfstream G450"

 

 

Yeah, definitely non-core. All the way, 100% non-core.

 

 

Edited: Page #11, not #17

[Gregmal]

Page 11 of the presentation, "Non-Core Assets"

 

"2007 Gulfstream G450"

 

 

Yeah, definitely non-core. All the way, 100% non-core.

 

 

Edited: Page #11, not #17

 

Bro, its Howard Hughes, of course they gotta have planes!

 

More as this sets in, two things here stand out as questions and observations...

 

1) Cost cutting and noncore asset sales(such as toys like the Gulfstream) indicate there s been a lot of unnecessary spending going on. I haven't followed this super close, but Im surprised they had this much waste to purge from the system. Especially given the shareholder base. But I guess where there is a lot of value, theres people realizing it, in one form or another.

 

2) This thing is supposed to be gushing value, from all over. So kind of incorporating the above, its surprising that after running a process this is all they are able to do.~$2B in asset sales and some cost cutting against $9B or so EV is nice, but definitely not screaming theres so much value here they dont know what to do with it all(I suppose this is why we got the selloff).

 

A management shakeup also kind of implies a greater degree of uncertainty around what they'd previously been doing. I did not seem to think this was a concern. At the least, it didn't really seem to ever come up when talking with people about this name. Lastly, I love share buybacks, but given all the development and cash intensive activities here, question whether its the right use of capital at this point.

 

[Spekulatius]

Page 11 of the presentation, "Non-Core Assets"

 

"2007 Gulfstream G450"

 

 

Yeah, definitely non-core. All the way, 100% non-core.

 

 

Edited: Page #11, not #17

 

Bro, its Howard Hughes, of course they gotta have planes!

 

More as this sets in, two things here stand out as questions and observations...

 

1) Cost cutting and noncore asset sales(such as toys like the Gulfstream) indicate there s been a lot of unnecessary spending going on. I haven't followed this super close, but Im surprised they had this much waste to purge from the system. Especially given the shareholder base. But I guess where there is a lot of value, theres people realizing it, in one form or another.

 

2) This thing is supposed to be gushing value, from all over. So kind of incorporating the above, its surprising that after running a process this is all they are able to do.~$2B in asset sales and some cost cutting against $9B or so EV is nice, but definitely not screaming theres so much value here they dont know what to do with it all(I suppose this is why we got the selloff).

 

A management shakeup also kind of implies a greater degree of uncertainty around what they'd previously been doing. I did not seem to think this was a concern. At the least, it didn't really seem to ever come up when talking with people about this name. Lastly, I love share buybacks, but given all the development and cash intensive activities here, question whether its the right use of capital at this point.

 

The assets are too much of an hodgepodge to be an easy sell. In a way I am not surprised that this process ended up a bit of a dud (hence sold into the pop after the news broke), but at $100 and change, I decided to buy back some shares. Looks like they had one only one potential buyer after the DD and this after contacting 35 different buyers, if this account is correct.

https://twitter.com/coredentaldds/status/1186391149000511495?s=21