
This Activist Investor Still Thinks Macy's Stock Is Undervalued
One activist investor still thinks Macy's (M) - Get Report lucrative real estate is being undervalued by the stock market.
During an interview with CNBC on Tuesday, Starboard Value's Jeff Smith said Macy's stock is undervalued, adding, "We are talking about a lot of real estate here." Shares of Macy's rose about 1.6% in midday trading following Smith's remarks.
Smith essentially reiterated a call he made back in July on the struggling department store retailer.
Back then, Smith called for splitting Macy's into two companies, one being retail store operations and the other a separate holding company for Macy's valuable real estate. At the time, Smith believed Macy's shares would be worth $125 a share if the retailer split the company.
According to Bloomberg data, Starboard Value owned about 1.06% of Macy's outstanding shares as of Dec. 31, 2015.
Macy's has resisted the push to spin off its real estate, but has taken several measures to appease Starboard.
The retailer announced last year that it was pursuing real estate transactions to enhance shareholder value. Macy's completed one such transaction with developer Tishman Speyer on Jan. 29.
More deals may be on the way soon.
"Just floating the idea of interest out there has generated an excellent response," said Macy's Chairman and CEO Terry Lundgren in a Feb. 23 interview with TheStreet, adding, "I think you will see some activity [this year], I can't predict when, though -- we were working on Brooklyn [a deal with Tishman Speyer] for over a year before we had a deal consummated."
Lundgren explained deals of this nature take time due to tax implications, the legal process and the need to get the required permits. The long-time Macy's CEO also took a small jab at activists like Smith who continue to push the company for real estate deals.
"The process is moving along very swiftly, and I think no one could criticize us for the speed in which this work is taking place -- they could, but they would be wrong," said Lundgren.
Macy's has also added executives with real estate experience to its bench. In March, Macy's named William Lenehan, an expert in real estate trusts, to its board followed by the appointment of Douglas Sesler as executive vice president for real estate earlier this month.









