Why General Growth Properties' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mall-based real estate investment trust General Growth Properties (NYSE: GGP  ) rallied as much as 14% as rumors swirled that the company may put itself up for sale.

So what: The impetus for the rumor is a filing with the Securities and Exchange Commission from General Growth Properties' second-largest shareholder, Pershing Square Capital Management (run by Bill Ackman), that it has been in talks with Simon Property Group (NYSE: SPG  ) to coordinate a possible takeover of General Growth. Brookfield Asset Management (NYSE: BAM  ) , however, doesn't support the idea of General Growth selling itself. As its largest shareholder, Brookfield controls roughly 42% of the company through shares and warrants.

Now what: And who said daytime television had all the drama? With Brookfield controlling such a large stake in General Growth, a deal seems incredibly unlikely to happen unless Simon Property and Ackman pony up an insane premium. General Growth is still mired under $16.5 billion in debt, and, as a stand-alone company, doesn't seem like a particularly attractive investment at 20 times forward earnings and with a projected yield of just 2.4%.

Craving more input? Start by adding General Growth Properties to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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Related Tickers

10/26/2016 4:03 PM
GGP $25.46 Down -0.59 -2.26%
General Growth Pro… CAPS Rating: **
BAM $35.38 Down -0.06 -0.17%
Brookfield Asset M… CAPS Rating: ****
SPG $188.38 Down -8.89 -4.51%
Simon Property Gro… CAPS Rating: **