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Todd Sullivan, Value Plays

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Latest Analyst Comments by Todd Sullivan, Value Plays
 

Memo to David Simon & The Media on “Uncertainty” $$ (Value Plays) - 10:55 ET Mar 11, 2010

First the News: he chief executive of Simon Property Group Inc (SPG – News) on Thursday said a plan by management of General Growth Properties Inc (GGP – News) to emerge from bankruptcy lacks certainty despite new financial backing. Simon, the largest U. S mall owner, last month offered to buy General Growth, the second largest, for $10 billion in a plan that had support from many General Growth unsecured creditors. But General Growth on Monday set forth a competing plan to emerge from bankruptcy, under which William Ackman's Pershing Square Capital Management and fund manager Fairholme Capital Management would invest up to $3.93 billion. 
Recent Research on Simon Property Group, Inc. (SPG)
Simon Property Group, Inc. (Moody's Global Credit Research)- Mar 09, 2010
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Share:  First the News: he chief executive of <span class="company">Simon</span> Property Group Inc (SPG – News) on Thursday said a plan by management of General Growth Properties Inc (GGP – News) to emerge from bankruptcy lacks certainty despite new financial backing. <span class="company">Simon</span>, the largest U. S mall owner, last month offered to buy General Growth, the second largest, for $10 billion in a plan that had support from many General Growth unsecured creditors. But General Growth on Monday set forth a competing plan to emerge from bankruptcy, under which William Ackman's Pershing Square Capital Management and fund manager Fairholme Capital Management would invest up to $3.93 billion. Tweet this 

Fairholme and Pershing Term Sheet to General Growth $$ (Value Plays) - Mar 09, 2010

You have asked us for a commitment that is designed to be consistent with the parallel equity investment proposed by Brookfield Asset Management Inc in their letter of , 2010 (the " Brookfield Proposal "), but is also capable of being adapted as circumstances change. In response to your request, we would like to propose to commit, severally but not jointly, $3.925 billion of new equity capital at a value of $15 per current share on the terms and conditions described in the term sheet attached as Annex A. Our proposal includes: • a commitment to purchase $3.8 billion of common stock of the reorganized Company (" New GGP"), after giving effect to the distribution of General Growth Opportunities, at a price of $10 per share;. • a commitment to provide the currently unfunded $125 million of capital to backstop a $250 million rights offering by General Growth Opportunities at a price of $5 per share. 
Recent Research on Brookfield Asset Management Inc. (BAM.A)
Summary: Brookfield Asset Management Inc. (S&P Credit Research)- Dec 23, 2009
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Share:  You have asked us for a commitment that is designed to be consistent with the parallel equity investment proposed by <span class="company">Brookfield</span> Asset Management Inc in their letter of , 2010 (the " <span class="company">Brookfield</span> Proposal "), but is also capable of being adapted as circumstances change. In response to your request, we would like to propose to commit, severally but not jointly, $3.925 billion of new equity capital at a value of $15 per current share on the terms and conditions described in the term sheet attached as Annex A. Our proposal includes: • a commitment to purchase $3.8 billion of common stock of the reorganized Company (" New GGP"), after giving effect to the distribution of General Growth Opportunities, at a price of $10 per share;. • a commitment to provide the currently unfunded $125 million of capital to backstop a $250 million rights offering by General Growth Opportunities at a price of $5 per share. Tweet this 

US Retailers “Concerned” Over Possible GGP/SPG Combination $$ (Value Plays) - Mar 06, 2010

Not matter what David Simon says, this IS going to be an issue. From the WSJ: National retailers are expressing growing concern that mall giant Simon Property Group Inc may gain too much market power if it succeeds in acquiring rival General Growth Properties Inc out of a bankruptcy proceeding. The concern raises the possibility that the deal might face antitrust criticism from retailers and others. 
Share:  Not matter what David <span class="company">Simon</span> says, this IS going to be an issue. From the WSJ: National retailers are expressing growing concern that mall giant <span class="company">Simon</span> Property Group Inc may gain too much market power if it succeeds in acquiring rival General Growth Properties Inc out of a bankruptcy proceeding. The concern raises the possibility that the deal might face antitrust criticism from retailers and others. Tweet this 

Yup…… GGP Wins Exclusivity Extension $$ (Value Plays) - Mar 04, 2010

Simon and General Growth's committee of unsecured creditors lobbied against anything longer than 45 days, arguing that General Growth should immediately accept Simon's $10 billion offer. With the four month extension, General Growth now intends to embark on a two pronged process of simultaneously soliciting offers to acquire the company or recapitalize it. It would aim to file an exit plan by June. 
Share:  <span class="company">Simon</span> and General Growth's committee of unsecured creditors lobbied against anything longer than 45 days, arguing that General Growth should immediately accept <span class="company">Simon</span>'s $10 billion offer. With the four month extension, General Growth now intends to embark on a two pronged process of simultaneously soliciting offers to acquire the company or recapitalize it. It would aim to file an exit plan by June. Tweet this 

Repost: “The Investment I Didn’t Make & Sick About” $$ (Value Plays) - Mar 02, 2010

In 2006 I started looking at a company called Green Mountain Coffee (GMCR). Then it traded at $12 and change (split adjusted) and was earning $.39 a share annually. I liked the coffee but it traded at a PE of 30 times earnings and despite growing revenues 40% in 2005 over 2006, a rise in expenses caused earnings to dip in 2006 over 2005. 
Recent Research on Green Mountain Coffee Roasters Inc (GMCR) more research
Share:  In 2006 I started looking at a company called <span class="company">Green Mountain</span> Coffee (GMCR). Then it traded at $12 and change (split adjusted) and was earning $.39 a share annually. I liked the coffee but it traded at a PE of 30 times earnings and despite growing revenues 40% in 2005 over 2006, a rise in expenses caused earnings to dip in 2006 over 2005. Tweet this 

David Simon to FTC…..”Step Off” …. $$ (Value Plays) - Mar 02, 2010

David Simon to FTC….Step Off" …. $$ ToddSullivan nd, 2010 . Am I the only one who thinks every time David Simon opens his mouth, he does himself a disservice? . From the WSJ: Simon Property Group Inc. Chief Executive Officer David Simon said that, if his unsolicited bid for bankrupt rival General Growth Properties Inc succeeds, antitrust concerns won't derail the combination, which would result in Simon owning half of the most productive shopping malls in the U.S. "No way. 
Share:  David <span class="company">Simon</span> to FTC….Step Off" …. $$ ToddSullivan nd, 2010 . Am I the only one who thinks every time David <span class="company">Simon</span> opens his mouth, he does himself a disservice? . From the WSJ: <span class="company">Simon</span> Property Group Inc. Chief Executive Officer David <span class="company">Simon</span> said that, if his unsolicited bid for bankrupt rival General Growth Properties Inc succeeds, antitrust concerns won't derail the combination, which would result in <span class="company">Simon</span> owning half of the most productive shopping malls in the U.S. "No way. Tweet this 

SPG + GGP? NO, Why? FTC $$ (Value Plays) - Feb 26, 2010

Forget everything that has been said up until now regarding Simon (SPG) property buying General Growth (GGWPQ) and whether or not their deal is better than Brookfield Asset's (BAM) offer. Like we have been saying since early December of last year, Brookfield has the inside edge (FTC reasoning given here). Now we have proof. 
Share:  Forget everything that has been said up until now regarding Simon (SPG) property buying General Growth (GGWPQ) and whether or not their deal is better than Brookfield Asset's (<span class="company">BAM</span>) offer. Like we have been saying since early December of last year, Brookfield has the inside edge (FTC reasoning given here). Now we have proof. Tweet this 

SPG + GGP? NO, Why? FTC $$ Rare late Friday night post but wanted to get this out to soak in over the weekend . 
Share:  <span class="company">SPG</span> + GGP? NO, Why? FTC $$ Rare late Friday night post but wanted to get this out to soak in over the weekend . Tweet this 

General Growth's Reorganization Plan Seen as a Rebuke to Simon (Retail Traffic) - Feb 25, 2010

However, in the view of Todd Sullivan, a Massachusetts based investor and author of the Value Plays blog, the plan put forth by General Growth, which would allow Brookfield Asset Management to buy its shares at $15 apiece, is bound to be much more popular with the shareholders, who might have more power in this bankruptcy proceeding than is traditionally the case. 
Share:  However, in the view of <span class="analyst">Todd Sullivan</span>, a Massachusetts based investor and author of the Value Plays blog, the plan put forth by General Growth, which would allow <span class="company">Brookfield Asset Management</span> to buy its shares at $15 apiece, is bound to be much more popular with the shareholders, who might have more power in this bankruptcy proceeding than is traditionally the case. Tweet this 

BAM Reported to Value GGP at $15….Some Details $$ (Value Plays) - Feb 24, 2010

BAM Reported to Value GGP at $15….Some Details $$ Here it is….Ackman's hand all over this……GOOD!! Gen Growth Prop Follow Up: General Growth proposes splitting itself in 2 to exit bankruptcy (13.50 +0.53) WSJ reports the co is expected to unveil a plan Wednesday to exit bankruptcy this year by splitting the company in two, with Canadian property investor Brookfield Asset Management (BAM) pledging $2.63 billion to the effort, said several people familiar with the matter. The complicated plan, drafted partly by activist investor and General Growth board member William Ackman, is meant to top a $10 billion buyout bid that rival mall owner Simon Property Group (SPG) made last week… The Brookfield plan values General Growth at $15 per share, but unlike Simon's all cash buyout offer, it relies heavily on selling massive amounts of new stock in the coming months The Brookfield plan values General Growth at about $45 billion in equity value, compared with $3 billion from Simon 
Share:  <span class="company">BAM</span> Reported to Value GGP at $15….Some Details $$ Here it is….Ackman's hand all over this……GOOD!! Gen Growth Prop Follow Up: General Growth proposes splitting itself in 2 to exit bankruptcy (13.50 +0.53) WSJ reports the co is expected to unveil a plan Wednesday to exit bankruptcy this year by splitting the company in two, with Canadian property investor Brookfield Asset Management (<span class="company">BAM</span>) pledging $2.63 billion to the effort, said several people familiar with the matter. Tweet this 

Eddie Lampert’s Annual Letter $$ (Value Plays) - Feb 23, 2010

The dedication of our associates and leadership team led by Bruce Johnson and the diversity of the Sears Holdings business portfolio—Sears Full Line stores, Kmart stores, our Home Services business, Sears Auto Centers, Outlet Stores, Hometown Stores, the Kenmore, Craftsman, DieHard and Lands' End brands, our majority interest in Sears Canada, and our online business properties including searscom—have allowed us to successfully manage through the economic and financial crisis of the past two years Today, the United States stands with an unemployment rate close to 10%, a housing market that appears to be stabilizing at depressed levels, and uncertainty over government policy and geopolitical events Despite this, Sears Holdings continues to make progress against our strategic initiatives and our long term financial goals 
Share:  The dedication of our associates and leadership team led by Bruce Johnson and the diversity of the <span class="company">Sears Holding</span>s business portfolio—Sears Full Line stores, Kmart stores, our Home Services business, Sears Auto Centers, Outlet Stores, Hometown Stores, the Kenmore, Craftsman, DieHard and Lands' End brands, our majority interest in Sears Canada, and our online business properties including searscom—have allowed us to successfully manage through the economic and financial crisis of the past two years Tweet this 

To Quote Emeril ……… BAM!!! $$ (Value Plays) - Feb 23, 2010

Canadian property giant Brookfield Asset Management Inc is readying a bid to take a large stake in U.S mall owner General Growth Properties Inc., according to several people familiar with the matter, aiming to top an unsolicited bid made last week by mall rival Simon Property Group Inc. Brookfield's planned bid, which could be unveiled as soon as this week, would allow General Growth to exit Chapter 11 bankruptcy proceedings as a standalone company, with Brookfield as its largest shareholder, these people said. The Simon bid values General Growth equity at about $3 billion, or about $9 a share Simon would also pay off in cash the company's unsecured creditors, who hold $7 billion in debt, valuing General Growth at around $10 billion 
Share:  Canadian property giant Tweet this 

Canadian property giant Brookfield Asset Management Inc is readying a bid to take a large stake in U.S mall owner General Growth Properties Inc., according to several people familiar with the matter, aiming to top an unsolicited bid made last week by mall rival Simon Property Group Inc. Brookfield's planned bid, which could be unveiled as soon as this week, would allow General Growth to exit Chapter 11 bankruptcy proceedings as a standalone company, with Brookfield as its largest shareholder, these people said. The Simon bid values General Growth equity at about $3 billion, or about $9 a share Simon would also pay off in cash the company's unsecured creditors, who hold $7 billion in debt, valuing General Growth at around $10 billion 
Share:  Canadian property giant Brookfield Asset Management Inc is readying a bid to take a large stake in U.S mall owner General Growth Properties Inc., according to several people familiar with the matter, aiming to top an unsolicited bid made last week by mall rival <span class="company">Simon Property</span> Group Inc. Brookfield's planned bid, which could be unveiled as soon as this week, would allow General Growth to exit Chapter 11 bankruptcy proceedings as a standalone company, with Brookfield as its largest shareholder, these people said. Tweet this 

General Growth News……Fast and Furious $$ (Value Plays) - Feb 20, 2010

This hurts Simon's (SPG) offer as Berkowitz holds $ 500m of unsecured debt, making him one of the larger holders By his admission on wanting a conversion, it would stand to reason he would be voting against the Simon transaction which would simply offer FAIRX a dollar for dollar on claims 2 Brookfield Asset (BAM) has filed notice they are increasing their shelf offering from $ 1B to $ 2B 
Share:  This hurts <span class="company">Simon</span>'s (SPG) offer as Berkowitz holds $ 500m of unsecured debt, making him one of the larger holders By his admission on wanting a conversion, it would stand to reason he would be voting against the <span class="company">Simon</span> transaction which would simply offer FAIRX a dollar for dollar on claims Tweet this 

Now Blackstone’s Joining Our GGP Party $$ (Value Plays) - Feb 18, 2010

Now Blackstone's Joining Our GGP Party $$ So, has David Simon lost all credibility with anyone else or just me? . Let's just start with GGP CEO Adam Metz's reply to David Simon's tantrum yesterday It is beautiful in its simplistic yet direct way of saying "go f%&k yourself"……ut 
Recent Research on The Blackstone Group LP (BX)
The Blackstone Group Third Quarter 2009 Earnings Call (Thomson Street Events)- Nov 06, 2009
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Share:  Now <span class="company">Blackstone</span>'s Joining Our GGP Party $$ So, has David Simon lost all credibility with anyone else or just me? . Let's just start with GGP CEO Adam Metz's reply to David Simon's tantrum yesterday Tweet this 

Now Blackstone's Joining Our GGP Party $$ So, has David Simon lost all credibility with anyone else or just me? . Let's just start with GGP CEO Adam Metz's reply to David Simon's tantrum yesterday It is beautiful in its simplistic yet direct way of saying "go f%&k yourself"……ut 
Share:  Now Blackstone's Joining Our GGP Party $$ So, has David <span class="company">Simon</span> lost all credibility with anyone else or just me? . Let's just start with GGP CEO Adam Metz's reply to David <span class="company">Simon</span>'s tantrum yesterday Tweet this 

Simon to GGP: “We Might Rescind The Offer You Rejected” …So What?? $$ (Value Plays) - Feb 17, 2010

Simon to GGP: "We Might Rescind The Offer You Rejected" …So What?? $$ Just got back from a day on the inter coastal waterway…first time, really neat. Now, let's look at this and call it what it is… Why is Simon making this offer now? 
Share:  <span class="company">Simon</span> to GGP: "We Might Rescind The Offer You Rejected" …So What?? $$ Just got back from a day on the inter coastal waterway…first time, really neat. Tweet this 

GGP Merger Would Make Simon A Force to Reckon With For Tenants and Lenders (Retail Traffic) - Feb 17, 2010

Besides Simon, one obvious contender for General Growth would be Brookfield Asset Management Inc, which owns approximately $1 billion of the REIT's unsecured debt Canada based Brookfield has long made known its desire to enter the US mall market and might be in a stronger financial position for an acquisition of that size, according to Todd Sullivan, a Massachusetts based investor and author of the Value Plays blog 
Share:  Canada based <span class="company">Brookfield</span> has long made known its desire to enter the US mall market and might be in a stronger financial position for an acquisition of that size, according to <span class="analyst">Todd Sullivan</span>, a Massachusetts based investor and author of the Value Plays blog Tweet this 

A Sign This Market Will Keep Going Higher $$ (Value Plays) - Feb 17, 2010

Companies from Kellogg Co to McKesson Corp pushed the number of US companies raising forecasts to 10 percent this quarter, while 41 percent lowered them The gap is the widest on record, according to data from Bespoke Investment Group LLC At the same time, analysts have cut first quarter profit projections by 02 percent on average in the past month, data compiled by Bloomberg show 
Recent Research on McKesson Corporation (MCK)
McKesson Corporation (Moody's Global Credit Research)- Feb 12, 2010
McKesson Corporation at JPMorgan Healthcare Conference (Thomson Street Events)- Jan 11, 2010
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Share:  Companies from Kellogg Co to <span class="company">McKesson</span> Corp pushed the number of US companies raising forecasts to 10 percent this quarter, while 41 percent lowered them Tweet this 

Simon Offers $10B for General Growth (Retail Traffic) - Feb 16, 2010

Since in a bankruptcy proceeding unsecured creditors generally get paid before common shareholders, creditors who are afraid they might lose their investment can sometimes force a bankrupt company to accept a bid that undervalues its stock, notes Todd Sullivan, a Massachusetts based investor and author of the Value Plays blog General Growth's unsecured creditors, however, face no such danger in his opinion "I think the chance of a sale based on this offer is zero," Sullivan says "It values the equity at about 30 percent below its [market] price on Friday 
Share:  Since in a bankruptcy proceeding unsecured creditors generally get paid before common shareholders, creditors who are afraid they might lose their investment can sometimes force a bankrupt company to accept a bid that undervalues its stock, notes <span class="analyst">Todd Sullivan</span>, a Massachusetts based investor and author of the Value Plays blog Tweet this 

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Todd Sullivan

Value Plays

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