In This Article:
We came across a bullish thesis on CBL & Associates Properties, Inc. (CBL) on wallstreetbets Subreddit Page by GuitarCute. In this article, we will summarize the bulls’ thesis on CBL. CBL & Associates Properties, Inc. (CBL)'s share was trading at $30.57 as of Nov 25th. CBL’s trailing P/E was 30.27 according to Yahoo Finance.
A modern city skyline with a REIT retail building at the center to symbolize the company's reach.
CBL is employing a unique strategy in the retail REIT space, utilizing non-recourse loans, a move that significantly mitigates risk for the company. In simple terms, non-recourse loans allow CBL to walk away from a property if it doesn’t perform, without risking other assets. The lender takes the property, and CBL only loses what it initially invested—similar to a down payment in a traditional mortgage. This model provides a safety net while maintaining significant upside potential. CBL’s operational performance also stands out, with metrics suggesting that the stock could be valued 2-3 times higher than its current price, given its superior return on invested capital (ROIC) compared to peers.
The company has a low float, with insiders, including Oaktree's Howard Marks, owning 64.5% of the shares, limiting institutional buying. To address this, CBL has been aggressively buying back shares, with 8% of the float repurchased over the past year, creating upward pressure on the stock. This strategy, combined with the company’s strong cash flow yield of 17%, positions CBL for continued growth. After offloading underperforming properties, the company is now focusing on profitable assets, generating cash, and leveraging its ability to manage lenders effectively.
Several catalysts lie ahead, notably a potential decrease in interest rates, which would further benefit the company. If the economy softens and rates fall, CBL stands to gain even more. The company’s momentum, including a 10% stock price increase over the past month, signals growing investor interest. Moreover, upcoming buybacks likely to be announced in February could push the stock even higher. With a strong strategic position and favorable market conditions, CBL offers significant upside potential, making it an attractive investment opportunity.
CBL & Associates Properties, Inc. (CBL) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held CBL at the end of the third quarter which was 11 in the previous quarter. While we acknowledge the risk and potential of CBL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CBL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.