For traders betting on the death of America’s malls, being right and making money are proving to be two very different things.
Reminiscent of Michael Burry of “The Big Short” fame, these hedge funds have piled into a trade that could reap huge profits if loans taken out by beleaguered mall and shopping-center operators eventually go bust.
While the strategy has largely been a winning one, on paper at least, there’s still one catch: the actual cost to maintain the trade month after month keeps growing as the mall industry refuses to die.
And that’s squeezing short sellers as they play a costly waiting game.
“The longs and the shorts are very much in a kind of Mexican standoff and seeing who is going to blink first,” said Gareth Davies, the head of research for commercial mortgage-backed securities at JPMorgan Chase & Co. The issue isn’t about where retail is…
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Last modified: October 4, 2018