Bill Ackman Is Wrong On General Growth -- Malls And The US Consumer Are So Screwed

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Hedge Fund manager Bill Ackman recently made a presentation arguing a bull case for distressed mall property owner General Growth Properties. In it, he made some surprisingly bullish arguments about the future of the mall, and the revitalization of the US consumer.

Well, there are two sides to every investment story.

Hovde Capital — via Market Folly — has made a presentation arguing against General Growth, against malls, and against the US Consumer.

Hovde’s view is somewhat conventional wisdom — the consumer is toast; there’s still a lot of deleveraging left, etc. — but they’re going up against well-known Ackman, so it’s interesting.

Check out the argument >>

First, thrift is coming back, and we have a ways to go before getting to normal.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

Access to credit evaporating.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

The home equity credit card is toast.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

Consumers aren't looking for pricey, mall-related stores. They want non-mall, discount retailers.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

And look, the non-mall retailers are doing well.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

While mall retailers are weakening.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

Plus, the internet is a mall killer.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

As for Bill Ackman, he's using outdated numbers.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

And his comparables are off. You have to look at leverage. Other, non-GGP malls have lower leverage.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

And the cash flow at GGP continues to collapse.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

Rents are still plunging.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

Cap rates are higher.

Source: Hovde Capital Advisors: General Growth Properties 'Fool's Gold'

And finally, commercial real estate is still tanking.

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