Hudson Bay Co. (HBC.TO)

He knew the stock price would be down. It is a really, really tough space. Too tough an environment for them to compete. He likes all the initiatives they have taken and also likes the real estate value. If you own, he would urge you to walk away from the space and own something that is working and is extremely expensive, such as Amazon (AMZN-Q).

This is the last survivor of the department stores. They have aggressive management that is doing an outstanding job of turning the company around. They are in Germany and moving into the Netherlands. They have the various brands for the different price points. But they have the REITs for the physical properties and they are discussing taking them public, which will unleash value. This could be a catalyst. Same store sales growth has been good in Canada.

Buying it for the real estate assets has always been the theory since it emerged as a public company. They’ve owned real estate since 1667, and probably the BV is less than the current market value. Nobody is very excited about retail department stores, and they haven’t exactly hit the ball out of the park. He is staying away from this.

Using REITs and looking at the real estate value, it is pretty easy to get a value of something around $30 for the real estate alone. You are paying less than nothing for the retail asset. They are doing all right in Canada. Saks is a little bit slow. They are bringing costs down across the board. A good story. Dividend yield of 1.27%.

The Bay is only a small part of this company. It is really an American company with Saks Fifth Avenue being its biggest asset, along with Lord and Taylor. Retailing stocks are not doing well here, so this has become a real estate play. The fellow behind it is a really smart real estate guy. This company has really good real estate assets. The stock has sold off too much, and if you are a long-term investor, it is okay, but if you want to play real estate, go buy a real estate company.

This has taken over Saks Fifth Avenue and will be rolling out those stores this year. Expanding into Europe. A very competitive environment. The Bay is more of a real estate play than anything else. Doesn’t feel that traditional retail is a long-term secular growth area.

(Top Pick Jun 30/15, Down 43.94%) The valuation of the real estate is a big part of it. It is a Canadian, semi-old blue chip. The Sax thing is good. They are not giving up on the department store.

He doesn’t know a lot about this company, although he does know they have been out acquiring a lot of assets. He isn’t a big fan of retail, which is a pretty brutal business. However, from what he can see, this is more of a real estate play than a merchandiser.

This will be reporting tomorrow. A seasonally tough quarter for them. His company expects a loss of $0.53 a share and the street is looking at a $0.35 loss. They are facing so much headwind from the Amazon world, and are really working hard to get into the Omni channel. There is a lot of very good real estate. Not something he would want at this time. They are losing money and he doesn’t see when they are going to be making money.

Has the original retail business, but also has expanded into the US and Europe. Fundamentally the value in the business is the real estate, not so much the retail. At the end of the day, with all the creative real estate deals, they still have to run a successful retail business, which has not been proven yet. In the short term, he would be a little cautious and see if they can operate a successful retail business.

As a proxy for a REIT? This story has been the market for some time. It is part of the wave of unearthing real estate value, and feels the trend is kind of over.

(Market Call Minute) It gets no respect. Retail has had a tough time. They have really good growth for 2016/17.

He really likes this. Has been disappointed in the action in the last little while. The real estate alone as value is worth more than the stock price. The operator is good. Has brought Saks in, changed the stores around, bought a major department store chain in Europe.

Doesn’t look at retail stocks often. However, in Canada with Target taking a stage left and Sears sort of on the ropes, it is a tough business to be in. However, this is almost a real estate stock, and is trading at a significant discount to NAV. Just added Saks in Toronto and have taken over various stores in Europe and just seem to be able to do the right thing. He is looking at this pretty hard right now. If you believe in the real estate story, this stock is probably good to $30.

(Market Call Minute) There is a lot of real estate value there.