Looking at the performance of SCG and US SPG share prices, it’s...

Looking at the performance of SCG and US SPG share prices, it’s very much driven by earnings results, more so than for other industries imo.

pre its August earnings result, SCG was trading at about 2.58 and is now 3.00+, despite VCX already reporting that conditions weren’t terrible and Governments already saying everything would return to normal Oct/Nov when 70/80% vacc. rates were reached.

From what I can tell, European analysts are still holding their scorched earth / bearish views, simply because the company hasn’t told them otherwise. JP Morgan, Morgan Stanley and Citigroup all have target prices of between 28 and 50 euros, based on the current uncertainty, lack of private market transaction data and URW not yet providing 2021 earnings guidance. URW’s official guidance remains no dividend until 2023.
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Large institutional investors won’t buy in bulk until they’ve been told to, as well. They need earnings, dividend, something to value the stock from, for the firm’s investment committee to hang their hat on and execute their conservative, fiduciary responsibilities. Ditto for many European hedge funds; large discretionary funds must remain market neutral and in theory prove to asset allocators that they’ve a valuation, and medium/long term view to justify taking a long or shot position. They’re more conservative than they used to be.

That leaves quant funds, which respond to announcements, momentum and other non-fundamental factors. URW has none of these things going for it.

Real Estate funds have enormous capital but again in order to justify hundreds of millions or billions or investment, also need some comparable sales data or earnings data to work from.

The daily share price volatility is also indicative of a directionless market. US futures were lower yesterday, Europe sold off, URW and LI down 3-4%. Today, US futures up, ditto URW and LI. It just shows that the daily market for these shares is largely index, passive and quant driven

Can only speculate that the above reasons have enabled Xavier Neil to buy 24% of the shares on market, over $3bn, plus notional call options purchased. This is absolutely extraordinary when you think about it, especially considering the share price has fallen or gone sideways over that period. It’s a $13bn market cap company/trust, and not esoteric either.

The opportunity is so good that I’m currently in Paris to look at the centres and see what all the fuss is about with the share price.

You have to show your vaccine pass when you buy something, and France has a 67% vaccination rate, but you wouldn’t know it. To my eye there’s no discernible difference to normal life except everyone wears a mask inside.

It’s a Tuesday afternoon in a large suburban Paris Westfield as I type this, and it’s about as busy with the types of people who go shopping on a Tuesday afternoon as you’d expect.

Growing up in the Chadstone SC catchment area, I’d like to think I’ve seen a good shopping centre on full tilt, and I can’t tell the difference between the 8 centres I’ve seen here and centres pre Covid, pre online in Australia. It’s obviously hard to tell what people are spending compared to usual, but there’s definitely foot traffic for a Tuesday. One comment to make is that these centres are true assets, comparable to Westfield’s best in Australia in quality, location and scarcity.

Last Thursday afternoon and Saturday were something else, though. There’s a chain here called FNAC that’s a cross between JB Hi-Fi and Borders. On Saturday afternoon in URW’s Les Halles FNAC book section, you couldn’t swing a cat. It was absolutely chockers.

There’s a centre about 50 minutes west of Paris called Val d’Europe, owned by Klepierre (LI). It’s large, somewhat upmarket, and at 5pm on Thursday the car park was full as far as I could see.

La Defense, Westfield Les 4 Temps centre on Saturday morning - official opening time is 10am, but the crowd to get in to Zara at 9.55am was 20-deep. I thought nowadays people shopped online from bed on Saturday mornings with a croissant and coffee, or took their children to sport, or perhaps walked the banks of the Seine around the Eiffel Tower, or visited the Louvre post lockdown… no. Lining up pre open to shop for clothes.

The weakness is clearly in boutique apparel stores which make up the numbers around the large chain stores and non discretionary places, and lack a brand to draw people in specifically. I’ve always thought most of these places have always looked empty and about to go bust, just money laundering operations for the husband/boyfriend’s nefarious activities. So not sure now to judge these places, but if there’s weakness in the recovery of these centres it’s clearly these stores.

The URW stock price could keep going down and never recover, but based on what I’ve seen here and in London, and the prices of leading shopping centre stocks in Asia and the US, if it does keep going down to oblivion I’ll tip my hat to the Gods for enacting a truly confounding Greek tragedy of the stock market.