Tuesday, June 9, 2009

Ackman Joins General Growth Board. What's GGP Worth?

Bankrupt shopping mall operator General Growth Properties (Ticker: GGP) announced yesterday that Bill Ackman – fresh off his activist campaign with Target for board representation, has just joined their board.

Ackman owns about 7.5% of GGP’s equity at an average cost of $0.46 per share. He believes the Company will be worth 13x his investment once it emerges from bankruptcy - suggesting a stock price around $6.00 (GGP is currently trading at $1.05).

Thomas Kirchner, the President and Portfolio Manager for The Pennsylvania Avenue Funds (an event-driven mutual fund (Ticker: PAEDX) specializing in activism and arbitrage) disagrees with Ackman’s valuation and challenges his assumptions on his blog The Deal Sleuth.