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.Follow @JonMHellerCFAThis article is commentary by an independent contributor, separate from TheStreet's regular news coverage.