The company is swimming in real estate assets. At year's end, Saks owned 27 of its locations, for a total of 3.8 million square feet. Although investors have been fooled before in placing inflated valuations on real estate assets -- Sears Holding ( SHLD) is a great example -- in Saks' case, one property in particular may be worth up to half of the company's market cap. The flagship store on Fifth Avenue in New York City may be worth up to $1 billion, or perhaps more in the right market.

That's the asset that made Saks seem compelling in early 2009 and was the reason I took a position in the name around that time.

The Saks story is just starting to heat up; but if there is any truth to rumors of a potential deal, $16-$19 a share may not be enough. The decision may ultimately rest with large institutional stakeholders, which include Southeastern Asset Management (17.21%) and Carlos Slim's Immobilaria Carso (an estimated 16%).

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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