Wednesday, 13 February 2013

HHC's Weinreb Presents at Harbor Conference; Brookfield Continues Selling

David Weinreb (CEO) presented in public for the first time (that I'm aware of) on HHC.  It was a great presentation - I highly recommend anyone interested in the company to listen to the replay, which can be accessed at   I will give my two-cents once I have had the opportunity to relisten to it a few times.

Brookfield (BAM) filed a 13D (for insider selling).  It appears they sold ~410,000 between Jan. 25 and Feb. 11, representing approximately 33% of total volume.  If my information is correct that they had ~2.7 million shares remaining as at Feb. 11, my rough math shows that it would take another 13 weeks or so for BAM to completely sell off their position at the current rate.  So despite the big move today as a result of Weinreb's speech, I believe the stock will be somewhat "freed up" sometime in May when the selling pressure from BAM eases away.   My deep respect for the brains in Brookfield was one of my motivators for buying into HHC, so it's a shame to see them go.   But my conviction that HHC is still a multi-bagger from here has been solidified and won't go away anytime soon.

Tuesday, 5 February 2013

West Windsor

It appears I may have overreacted (article).  HHC expressed interest in doing a mixed used development, but for now just wanted to meet town residents and basically introduce themselves.  I think their approach is sensible: get a feel for want people want or don't want instead of asserting your plans.  The presentation contained no renderings of what the property could look like.

I could be wrong... it is actually quite likely that John DeWolf already knows exactly what he wants out of the acreage and is going through the motions of being stakeholder friendly. Either way, it is a win-win for everyone.  The property is an eye sore and I'm sure anything HHC does will be an improvement. 

An interesting snippet is that Wyeth sold the 658 acres to Rouse Corporation (which was acquired by GGP and subsequently some properties spun out into HHC) in 2004 for $35 million; that works out to ~$53,000 per acre.  In the original spinout prospectus from 2010, West Windsor's net book value is listed at $20.5 million (~$31,000 per acre), implying that a big write-down was taken on this property.   Now, a sceptic would say that land can be worthless.  But again, I'd be willing to bet that when the 60 buildings are cleared and ready for development, each of those acres will have a market value in excess of 10x what Rouse paid for them in 2004.  

Let's assume the land on which my house resides is worth $175,000.  Assuming my lot is around 1/7 of an acre, this would imply that the market value of an acre in my district (which by the way is very middle class) is ~$1.2 million which equates to 22x what Rouse paid and 39x the net book value per acre on the balance sheet.

HHC is an investment that necessarily requires patience.  I made the mistake of taking a 30% gain on some of my stock in 2011 and reinvesting the winnings in low quality companies that tanked thereafter.  At 1.2x book value (and an extremely understated one at that), I still think that a new investor stands to do well in this name. 

Weinreb presenting at Harbor Investment Conference: On Feb. 13th, Dave Weinreb (CEO) will be giving a presentation.  Hopefully this will be available afterward via webcast.   Other than his shareholder letters and comments in press releases, he has remained pretty much a mystery. I realize this is his first gig as a public company CEO and look forward to seeing him open up a bit more.  But... of course there is no hurry.