For about 40% of the over $13.9 billion invested in constructing its chain of warehouses, Amazon could write a check to cover the combined market cap of Sears, RadioShack and J.C. Penney.
But Amazon has apparently ignored the analysis of Bruce Berkowitz of Fairholme Fund, who claimed in a Fortune interview in November 2012 that Sears' real estate was worth at least $160 a share. That would put the market cap of Sears closer to $14 billion than the current $4 billion.
But with one billion square feet of vacant commercial retail space across the United States, Amazon and the rest of the market clearly do not agree about the hidden value.
That should also keep investors away from retail stocks touting undervalued property. Location is critical in real estate.If a store has failed, that is a good indicator that the setting is not alluring for either shoppers or investors. The revealed preference of consumers is obviously not to patronize that store in that locale. It's a glaring economic indicator that should keep investors away from failing retail chains like Sears, RadioShack and J.C. Penney. At the time of publication, the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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