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Washington Prime: Why I'm Short This 18% Yielder

Published Wed, 03 Apr 2019 08:00:00 -0400 on Seeking Alpha

I previously purchased shares of Washington Prime Group (WPG) in 2017 in hopes of collecting a high yield while waiting for the retail sector to turn things around. Instead, retailing has - unbelievably - accelerated its losses, and peers such as CBL & Associates (CBL) have imploded. Once CBL cut its dividend in late 2017, I realized the sector was in more trouble than I had thought. Subsequently, I used a rally in WPG stock in early 2018 to get out with a manageable 10% loss.
Since then, I've been waiting for an opportunity to join the correct side of the trade - shorting mall stocks - and that moment is here. With CBL stock collapsed and Pennsylvania Reit (PEI) - the other closest comparable - down nearly 50% since last summer, WPG stock stands out as the low-end mall peer that is overdue to catch up with gravity:

Data by YCharts
Since I think most people that own WPG stock have heard a bear thesis or two, let's go through this article with a different angle. Here are the major bullish points on WPG stock, and why I, as a short seller, am not worried about them.
WPG Stock: Bullish Misconceptions
One common misunderstanding that bulls on low-end malls hold is that the Retail Apocalypse is overblown. They claim that while yes, a lot of stores are closing, at least as many new ones are replacing them. That may be statistically true, but it's entirely irrelevant to the thesis if you own CBL or WPG stock. Why's that? Because the new stores that are opening... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CBL & ASSOCIATES PROPERTIES 1.38   0.0 -0.95 0.35 27.34
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST 5.68   0.0 -1.81 0.84 14.58

CBL & ASSOCIATES PROPERTIES - CBL
CBL & ASSOCIATES PROPERTIES - CBL  


Older articles featuring Cbl & Associates Properties (CBL):
Upside-Down Week As REITs Stumble And Yields Surge
CBL Properties Declares Preferred Stock Dividends
Cashing In Dividends From Excessive Fear To Generate Income From Mall REITs
The Stunning Story Of Retail eREITs And Why Total Return Matters Even For Dividend Growth Investors - Part II
Washington Prime Group: Why A Dividend Cut Is Very Likely
Our High Yield REIT Portfolio: Q2 2019 Update
CBL Properties Declares Preferred Stock Dividends
Our High Yield REIT Portfolio Heading Into The 2nd Quarter
Dividends By The Numbers For March 2019 And 2019-Q1
Deep Value And 18.5% Yield From Washington Prime

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