Markets will eventually adapt to Reddit scenario: Trader
The largest shareholder in mall owner Macerich Co. sold its entire holding for nearly US$500 million when the stock soared after being touted on Reddit.
Ontario Teachers’ Pension Plan sold 24.56 million shares on Wednesday at an average price of US$20.25 a share, according to details in an amended 13D. The Canadian fund had owned 16.4 per cent of the company, according to data compiled by Bloomberg.
Macerich, a real estate investment trust based in Santa Monica, California, has been struggling for years and was battered by a pandemic that forced malls to shut down and pushed consumers toward e-commerce. The stock lost 84 per cent of its value over a three-year period ending Dec. 31, 2020.
Then comments began appearing on Reddit boards including r/wallstreetbets, the subreddit now famous for helping to fuel an astonishing rise in GameStop Corp., AMC Entertainment Holdings Inc. and other heavily-shorted or out-of-favor stocks.
Macerich shares jumped 68 per cent in four trading sessions and reached about US$26 at one point on Wednesday on frenetic volume -- allowing Ontario Teachers to get out.
“We’ve been a long-term investor with Macerich and throughout this relationship they have been a valued partner,” Dan Madge, a spokesman for the Teachers fund, said in a written statement. “Moving forward, we are focused on scaling and diversifying our global real estate platform, and growing our existing Canadian real estate business.”
One Reddit user touted Macerich as “GameStop’s landlord,” saying it has “the potential to offer a GME-like short squeeze, but with better downside protection.” The short interest is 57 per cent of the float, according to data compiled by Bloomberg.
Macerich owns 52 shopping centers across the U.S., mostly in cities, according to its website. That includes Kings Plaza Shopping Center in Brooklyn and the Shops at North Bridge in Chicago.
Its shares fell 15 per cent on Thursday to US$19.01. The stock jumped when trading opened in New York on Friday, but it was down less than 1 per cent as of 9:43 a.m.
Heavily shorted retail property owner Tanger Factor Outlet Centers Inc. has also seen its shares shoot up in January, gaining 63 per cent this year.
The company’s stock closed 2016 at US$35.78. Four years later, it had lost 72 per cent of its value and finished 2020 at US$9.96.
Tanger slipped 9.4 per cent on Thursday, closing at US$16.19. The stocked jumped as much 7.2 per cent on Friday, before paring the gains.
Even with the recent stock gains for mall owners, the “fundamental outlook for malls and outlets” has not changed, according to Green Street.
“The unusual trading activity is being driven by retail investors fueled by social media encouragement and speculation,” the report said.
--With assistance from Natalie Wong and Scott Deveau.