Macerich: A Misunderstood Potential Multibagger

Are shopping malls really dead? ☠ My investment thesis for $MAC

I apologize for being so quiet over the past few months as I’ve been heads down on personal projects and investment research. The newsletter has taken a backseat, but I’m hoping to share more with you all in the coming months!

These are obviously wild times in financial markets. I won’t bore you by rehashing coronavirus news or anything along those lines. What I will say is that I’m finding incredibly interesting situations and dislocations in certain areas of the markets. There are liquidations and investment fund de-leveragings happening, which is creating pockets of value I haven’t seen since 2008/2009.

Markets like these are not super common (although seemingly more common in the past 30 years), and while they are scary in many ways, they also offer opportunities to generate tremendous wealth. There’s no avoiding uncertainty, as we can’t know the future exactly. If we wait too long for blue skies and certainty, the juiciest opportunities will be gone. So I am actively hunting big game in financial markets because the window is likely small.

There’s no doubt that we have entered a new economic phase and that means some stocks which look like bargains are really just value traps. In other cases, there are stocks which will be 5-10 baggers in three years from current levels. One of the keys to investing during this time frame (as in 2008-2009) is knowing how to assess balance sheets, credit agreements, and capital structures. This can mean the difference between “catching a falling knife” that ends up severely damaging one’s portfolio, and owning something that will survive the crisis period and go on to thrive.

Again, certainty is impossible to attain with investing, but we can apply probabilities to possibilities and pick situations that have high probability adjusted reward-to-risk levels, or said another way, asymmetric upside optionality. I believe I have several of those in my portfolio now. Today I want to share one of those with you.

The stock is actually a publicly traded real estate investment trust, or REIT, which owns high quality shopping centers in the US. That REIT is Macerich, trading under ticker symbol MAC. It closed last week just above $5 per share and I think it has the potential to be a $15-$30 stock (3-6X return) in a few years.

Yes I know that malls are currently shut down and people are calling for the retail-apocalypse to wipe out most brick-and-mortar retailers and malls in the near term. But there’s more to this story than meets the eye, especially with MAC and especially at these prices.

I’ve created an hour long video that walks through some of the ins and outs of my investment thesis. It will do a better job of explaining the situation than I can write about here. So if I’ve piqued your interest, check it out here:

And if you want the TL;DR version, here’s my quick tweetstorm on MAC:

Stay safe and healthy out there, and don’t forget to take care of yourselves both physically and mentally!