Hudson's Bay Co. T.HBC

RE:The HBC real estate valuation situation is

[seatleslim]

My approach on “deep value” is don’t touch it unless you have a 3 to 5 year time frame, have thorough understanding as to why the stock is selling at a fraction of value and be able to stomach a 20-50% drop in value before winning. Ludicrously price stocks have a tendency to became more ludicrously priced. 

Take the current situation. I do believe the real estate nav represented by the company. If it selling at a third of value it can easily sell for 20% of value, which is 7. Don’t expect it to happen but could happen.

Why does stock sell at this valuation?  Retail is redlined and L&B has likely created some paranoia in its efforts to coerce change - a strategy it is marketing to the clients of its hedge fund.  Will management use the value of the real estate and squander it on a retail operation that will lose money in perpetuity?  I tend to think that is an absurd proposition, but given the environment, fear governs worst case priced in. 

Are bakers tying to steal the company?  No one can know but it’s not going to happen sub-cost basis of Ontario Teachers or WeWorks. 

On the retail, it is hard for me to believe that q4 won’t significantly beat expectations when you consider the comp last year (when futures were down 1000 point into trump victory). But that won’t transpire till Jan or feb time frame. Q3 doesn’t matter Imo, though could easily create volatility one way or another.  None of HBCs formats face maceys magnitude of challenges. 

You do do not want to own stocks like this if you’re going to wake up one morning and because it’s trading at 10 you convince yourself it’s a giant mistake. 

By by the way, if there were catastrophic risks here due to liquidity issues/risk of capital calls you have a far different situation. That is not the case here.