Once in a blue moon, I have a short position utterly and totally blow up in my face. One of those positions in which, say, there’s a buyout and the stock gaps open 40%. Nasty stuff.
This happened back on February 10th. I was short Taubman, which is a big commercial retail landlord. I (quite correctly) speculated that commercial real estate was about to die, and the rounded top on Taubman Centers (NYSE:TCO)was amazing.
TCO Chart
Sadly, the stock exploded higher on a rock-solid buyout from Simon Property Group (NYSE:SPG) which, in case you can’t quite make it out, I’ve helpfully tinted in green.
Simon Property Group (SPG) Chart
Now, with the benefit of hindsight, we can see that things didn’t turn out quite how Taubman shareholders might have hoped. I covered basically at the worst possible price, and within days, Covid-19 hit.
As of today, SPG told TCO to go pound sand, and the deal is off. So, the irony of ironies, this short would have turned out to be terribly profitable, instead of the dreadful loss that it was.
There’s no real takeaway from this except you just never know. The real economy (as opposed to, say, the latest price for Amazon.com (NASDAQ:AMZN)) is in tatters, and I’m confident more and more of these mergers are going to disintegrate before our eyes.
