Unstructured Finance

Bankruptcy no barrier to entry for General Growth stock

There were more than a few quizzical looks in the newsroom this week when General Growth Properties said it would again list its shares on the New York Stock Exchange. Wouldn’t bankruptcy preclude the stock from being on the Big Boad? Not only does being bankrupt not keep your stock from being traded, but from the reaction of investors, it won’t even make your stock a sell.

Ilaina Jonas reports General Growth is not alone as having its shares trade on the Big Board while operating under Chapter 11 bankruptcy protection. A representative of the exchange did not know how many of the approximately 2,425 companies trading on the New York Stock Exchange were in Chapter 11. But a handful, such as W.R. Grace, have continued to trade on the Big Board post-bankruptcy.

General Growth is a bit different, still. It was delisted after its April filing and has now returned. The company has a market capitalization of over $4 billion, making it the 15th-largest publicly traded REIT of nearly 130 REITs traded on the NYSE. About half of General Growth’s shares are owned by hedge fund manager William Ackman of Pershing Square Capital Management and by Chairman John Bucksbaum and his family or family’s trust. Management is still calling the shots, even from bankruptcy, since the pervasive view – though not officially the view of the court yet – is that the company was sent into the tank by the credit crisis and not anything fundamentally wrong with its business. There is even an equity committee taking part in the bankrtupcy proceedings.

Clearly the stain of Chapter 11 is not worrying investors. The stock, on its re-debut, is up nearly 3 percent in early afternoon trade.

Check Out Line: At least Ackman outpolled most of his slate …

ackman1Check out the final tally from the contentious Target Corp annual meeting.

William Ackman had already lost the battle to seat his slate of director nominees on the Target board last month, but the retailer released the final vote totals and the activist shareholder came up far short in trying to win investor support, garnering 19 percent of the votes cast.  That topped the tally for three of his other four nominees.

The hedge fund director, whose Pershing Square Capital Management had a 7.8 percent stake in Target when votes were cast, launched his proxy contest in March to seat a slate of five director nominees after Target refused his proposal to spin off land under its stores into a real estate investment trust to boost its stock price. 

Former Starbucks CEO James Donald, one of Ackman’s five nominees, garnered 22 percent of the vote, while the other three each won 8 percent. All four of Target’s incumbent director nominees received more than 70 percent.

Target investors shoot down Ackman

ackmantarget

When an activist investor comes to town, it appears that Target security goes on high alert.

While Target had its shareholders, including hedge fund manager William Ackman, and the media fly to one of its yet-unfinished stores outside of Milwaukee to attend their annual meeting, it greeted them with a heavy security detail.

From guards zooming around the parking lot on segway personal transporters to chase down wayward  parkers, to Target employees scanning shareholders with handheld metal dectors when they entered its stores, Target made it very clear it was in no mood for fun and games at its annual meeting.  

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