I'm not blaming neither the shorters nor the manipulators as it is their money, their decisions, for whatever reasons thay have. If I didn't expect these things, I would not have bought the shares. It's the reality of our life which we have to cope with. I'm usually a shorter on other stocks too. But I'm a long holder for CNP as I believe the great potential of Centro.
michinyon,
Yes, I have to admit I'm still happy with the outcome, for the following reasons:
1. When I bought the shares at $0.38 each, they were worth about $3 each if the assets were calculated as the book value ($1.31 per share) and the intangible value is included. So, even if the net assets reduce to half based on 15% discount, it still has $0.65 per share, and the share may value between $1.50 and $2.00. I have no reason to be unhappy.
2. As I said in the other post, we should not give the same discount rate to the rest assets. The gaps between the book value and market value are significantly defferent amoung properties. In my experience, the book value of the newly purchased properties are more likely close to the market value (such as those US properties for Centro), and the book value of long hold properties are usually significantly underestimated (such as most of the Australian properties for Centro)due to security reasons. Some of us may notice that there is a lawcase recently in Melbourne that a vendor sued the valuator for million dollor compensation due to over-valueing his property and caused damage on his shifting of residence. It is not surprising when we hear some of the Australian shopping centres are sold above the book values. I don't expect it would be the same for then US shopping centres, not only for the real estate market condition. That's why I said don't be panic if the prices are not as good as expected in US. The banks certainly wish Centro holding quality and underestimated assets. That's the point. So, even if with 15% on the sold assets, the value of the net assets is not going down to half, it should be more than that. Based on this, the banks should feel comfortable even the gearing reduces only 7% to 68% as they know it is actually lower than the figure showing. I'm not sure if I've explained the point clear enough.
3. I bought the shares mainly not aiming to the net asset value at the moment. With over $10 billion quality assets on hand (after required selling and excluding those management assets), Centro still has great potential in the future. I fully understand how fast the value of a quality property would rise in a good year of real estate market. We experienced 60% rise in the past. You cannot deny it could happen again. Even a 20% rise, it would be a big one for per share. And the rental follows CPI, which would be high in the coming years. When the term of lease finishs and needs to exercise an option, the rental would be adjusted according to the market value, which usually means much more rise than CPI. So, the income would rise faster as well. Hence the distribution will increase significantly, which affects the share price greatly. This is the main reason that I bought CNP and planed to hold long. I really don't care too much about the net asset left. I'm not sure if I explained clear enough to this point.
I'm not claiming I'm the person holding the truth, but very happy to share my opinion with other people.
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
