Hammerson

28 March 2021 By PDSNET

Hammerson has been listed on the London Stock Exchange since 1945. It is a real estate investment trust (REIT) and owns “flagship destinations and premium outlets in key cities across the UK and Europe”. Most of the company’s properties are shopping malls like Brent Cross in London, The Bullring in Birmingham and Dundrum Town Center in Dublin. Obviously, these retail outlets were already affected by the protracted Brexit negotiations when the pandemic began.

All in all, 2020 was a terrible year. The company reported an IFRS loss of GBP1,7bn and rental income down 41% on a like-for-like basis. Its tangible net asset value (NAV) fell by 26% to 82 pence per share after the rights issue – which should be compared to its current share price on the JSE of 705c. The company had a loan-to-value of 46% at year end. Obviously, much of the 2020 loss was due to the downward re-valuation of the company’s various retail outlets. That loss should be recovered once the UK vaccination program is complete. Undoubtedly, there will be some loss of custom to online shopping which will not come back, but the book value of the company’s properties is now probably excessively conservative.

Add to this the fact that Resilient’s Des de Beer is the CEO of Resilient, and a director of Lighthouse and Hammerson. Lighthouse owns 15% of Hammerson and is its second largest shareholder. We know that Resilient owns a chunk of Nepi Rockcastle and shopping malls in various European cities. With Hammerson trading at a significant discount to its NAV and the UK rapidly getting on top of its vaccination program, it might make sense for some kind of merger between these three companies to be in the wind. Consider the chart:

Hammerson (HMN): 9th October 2020 - 19 March 2021. Chart by ShareFriend Pro.

 

This chart shows a standard candlestick chart at the top, an on-balance-volume (OBV) chart in the middle and a volume histogram at the bottom with a 30-day simple moving average superimposed. You can see here the steep rise in the OBV from about mid-February 2021 which shows that a large investor is accumulating Hammerson shares. This is a classical insider trading pattern – large increases in volume accompanied by incremental increases in price.

The slight sell-off over the past four trading days is probably some profit-taking, but you will notice that it does not overwhelm the previous 16 trading days of steady accumulation. To us it looks very like the strong hands are buying and the weak hands are selling.

If there is a plan afoot for some kind of merger activity involving Hammerson, then it looks as if someone with deep pockets is quietly picking up whatever shares they can before the news is made public.

Hammerson owns some excellent retail outlets and is trading at less than half its NAV. If retail is expected to improve in the UK, then it should be a potential takeover target.


DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.



Share this article:

PDSNET ARTICLES

The Confidential Report - May 2021

America
The US economy grew at an annualized rate of 6,4% in the first quarter of 2021 – which was much faster than expected. Gross Domestic Product (GDP) was $19,1 trillion – which can be compared to the $19,3 trillion of the December quarter of 2019 - before the pandemic took hold. This shows that the economy is now virtually back to pre-COVID-19 levels. The

Top of the Market Signs

In last week’s article, 12-Year Bull Trend, we pointed out that the bull trend was rising exponentially and ultimately that could only end with an exponential collapse. We said that the exact timing of that collapse was very difficult to assess.

You may also recall our article of 23rd January

12 Year Bull Trend

On 6th March 2009, just over 12 years ago, the S&P500 index made an intra-day cycle low at 666.79. It was the end of a 17-month bear trend which had seen the S&P fall by 57,4%. The world was in the teeth of the sub-prime crisis and negativity abounded. Investors were terrified.  The response to the crisis was massive and world-wide.

The Confidential Report - April 2021

America
The S&P500 index closed above 4000 for the first time on Thursday 1st April 2021 at 4019.

 

You can see the impact of the COVID-19 V-bottom, which we regard as an extraneous non-economic factor, and the subsequent acceleration of the S&P. Obviously, the

Afrimat Revisited

On 25th May 2020, ten months ago, we published an article on Afrimat in which we said we liked what the company was doing and considered it to be undervalued. At the time Afrimat shares were trading in the market for R29. In the past ten months they have risen to R46 – a gain of 58,6%. Consider the chart:




You

Aspen

The relationship between technical analysis and fundamental analysis is the relationship between the reality and the perception of that reality in a company. The fundamentalist searches for the share’s real value by studying the company’s financials. The technician studies the impact of investors’ perceptions as they are reflected in the

OBV and Mpact

Joseph Granville, talking about the share market, famously said, “volume leads price”. By this he meant that the volume traded in a share tends to begin increasing before the price rises. He encapsulated this idea in his “On Balance Volume” technique (OBV). If you are not clear on OBV go back and re-read On

The Confidential Report - March 2021

America
The major change that has come about in America since the advent of the Biden administration has been a broad shift towards “risk-on”. The uncertainties associated with Trump are fading. American investors have welcomed the economic logic and sanity of the new administration with a desire to generate returns which are well above those offered by US Treasury

Naspers

Naspers is the largest share on the JSE with a market capitalisation of R1,67 trillion. Naspers was founded in 1915, as a printer and publisher of newspapers and magazines. It has since evolved into an international social media, entertainment and gaming company.

This share has the problem that it is undervalued in relation