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Simon Property Group, Inc. (SPG)

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160.58-0.43 (-0.27%)
At close: 4:02PM EDT
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  • Is retail bottomed? Jared Dillon is the only finance guy I read and he thinks so. Below is his article on the subject.


    I’m sure you’ve heard that malls are getting killed. Pretty soon there will be no malls. Except for those with a Planet Fitness!

    Source: WZZM
    There has been lots of ink (and electrons) spilled over the death of retail.
    Everyone knows it is only a matter of time before Amazon puts every department store, every mall, every brick-and-mortar retailer out of business. Amazon gets an infinity market cap and everyone else gets zero. Sound familiar?
    That’s the accepted wisdom.
    Is Amazon a great business? Yes.
    Is a department store a bad business? Probably.
    Does Amazon get 100% market share, with department stores getting zero? Probably not.
    Amazon has over 80 million Prime subscribers in the US. It’s not quite saturated, but it’s getting close.

    I admit to being a Prime member, a late adopter.
    It is pretty cool. Stuff shows up on my doorstep in two days, for free. The huge poker chip set I just ordered probably weighs about 40 pounds—free shipping! And I get all the Prime movies and TV shows.
    Sometimes, when I reflect on what a good deal Amazon Prime is, I think that I’m picking Amazon off. But they’re probably picking me off! 80 million customers times $100 is a lot of money.
    Here is my thesis: Amazon will grow and grow, but there will always be a role for physical retailers. A reduced role, for sure, but there will always be a role.
    From a capital markets standpoint, now might be the time to put on the trade.
    The Bottom
    This is when I started thinking that we've reached a bottom in physical retailers: Last week, ProShares—a $27 billion ETF manager—registered to list some double short leveraged ETFs on brick and mortar retailers! 
    According to Bloomberg, “The ProShares UltraShort Bricks and Mortar Retail fund and ProShares UltraPro Short Bricks and Mortar Retail fund will seek to use derivatives to generate daily returns of two or three times the inverse of an index comprising the most at-risk US retailers…”
    In my experience, specialty ETFs like this are usually listed at the worst possible times. Plus, you know my thoughts on leveraged ETFs.
    When 2x short leveraged ETFs are being listed on physical retailers… it is probably time to buy physical retailers.

    This infographic from AEI is a couple of months old. Since then, Amazon’s market cap has increased to $481 billion. Meanwhile, Macy’s market cap has fallen to a little under $6.5 billion.
    Amazon is worth around 75 times more than Macy’s? That doesn’t seem right.
    I hope by this point in the article I have you thinking.
    I am no Macy’s fan. It is a pretty terrible business, they sell middlebrow stuff in middlebrow locations. Although their online business is actually not bad.
    I used to buy ties at Macy’s, back in 2001. People laughed at those ties. I no longer buy ties at Macy’s.

    But look—at a $6.5 billion market cap, Macy’s is reaching distressed levels. That means we have to put our distressed investor hat on, pick this business apart, and see if there is value—in all parts of the capital structure. Maybe we don’t like the stock, but maybe we like the bonds, for example.  
    And, Staples was bought by private equity recently for about 0.4 times revenue. Apply that standard to Macy’s and you get to a $10 billion valuation. They’re still kicking.
    Plus, there’s an argument that this whole Internet retailing thing is just a giant bubble, according to the chart below.

    Source: @bySamRo
    How Do You Play It?
    This is a smart trade, but it is also a dangerous trade unless you are smart.
    There are two ways to do this:
    1) Be a distressed investor: Look at the worst-case scenario, look at all parts of the capital structure, and find value.
    2) Be a quant: Buy a basket of physical retailers, sell a basket of Internet retailers, and wait for them to converge.
    The worst way to play it is just to naively buy Macy’s (or another retailer) and hope for the best.
    Furthermore, I think it’s time to go dumpster-diving in Mall REITs, which is what we’re going to do in the next issue of Street Freak.
  • Too expensive. AMZN is going to kill this.
  • War is a series of catastrophes that results in a victory. http://dataunion.tistory.com/11630

    Simon Property Group NYSE $SPG Correlation Histogram
    X axis : Stocks Price Correlation Coefficient Y axis : Quantity of stocks Sep-2016 1,000 Day Parameter 4,338 NYSE Stocks Price Analysis This stock mode of correlation coefficient is -0.7 In other words, the correlation coefficient of the other stocks
  • The Gap is not doing as bad as you say., They are still making a good profit
    As for ANF a handful of companies were bidding for this stock including American Eagle outfitters and Express but ANF turned them all down.
  • Aberronchie & Fetch, and Gap, continue to sink. More mall rats heading for the cliffs.
  • I can spell frogasrep. what business of it is yours to know how many shares I have purchased. it seems to me that you are boasting. if you own 1 share or 100000 we are all in the same boat sadly to say, since the stock is at a somewhat low, all anybody who has share' s in this stock
  • It is as if they just reported Earnings Wed, missed estimates and reduced dividend.
    the shorts must have it all figured out.
  • wants to see is a rebound p.s. I don't need 4 or 5 posts to capture anybody's attention. :)
  • Earnings around the corner. I understand retail stores are scaling down (doubt will go extinct) but there are plans to restructure oentertainment & dining.
  • looks like we got beginnings of bear market along with SPG going down.
  • what happened to the $229 bids ? LOL
  • L Brands plunges 9%. Maybe Valentines Day teddies will save another mall rat ?
  • somewhat low Robert? Down 7 dollars a share? AMZN up 17 I guess I should have bought AMZN instead of Simon stock.

    Am I boasting? Well not now.
  • selling with vengeance today after a nice 7/3 rally, any news or event to trigger such an onslaught ?
  • goes up 3.5 on Tues then gets wacked down 10 Wed and Thurs.
  • Lets see Barney,
    Today's close on Amazon is -14
    Simon + 3.42 Today the bell is tolling for Barney. Yea Simon, do what Barney tell you to do "put that into your equation box"
  • Hey Barney ole boy. Is the bell tolling for us yet, Or maybe the bell will be tolling for you. The states are getting to tax online shopping so they can get the tax Amazon is taking away from them with their great online shopping platform. My state already is talking tax time for Amazon.
  • When I sell out Simon Stock I will buy GOLD.
  • Oh Robert, I'm sitting on 300 shares of SPG. How many shares do you have?
    My friend who advised me to buy SPG has 100000 shares.
  • I am tired of Robert. How many would agree. (Robert can't even spell) The main point of SPG is to make money which I have done even though SPG has gone down from 229 to 155. Hey ya all don't you agree. why yes you should agree
    His point is SPG should go to 1000 a share. Yes that's the main point don't you agree?