SKT - Valens Credit Report - 2022 05 19
Credit markets are materially understating credit risk, with a cash bond YTW of 4.708%, relative to an Intrinsic YTW of 6.508% and an Intrinsic CDS of 364bps. Meanwhile, Moody's is understating the firm's fundamental credit risk, with its Baa3 credit rating two notches higher than Valens' HY1 (Ba2) credit ratingEarnings Call Forensics™ of the firm's Q1 2022 earnings call (5/5) highlights that management may lack confidence in their ability to continue acquiring partnership opportunities and maintain lease renewal momentum from existing tenants. In addition, they may be overstating the potential of TangerClub and their deals with Foxwoods. Furthermore, management may lack confidence in their ability to successfully execute on their marketing initiatives for tenants, benefit from non�rental revenues, and replace underperforming retailers with better-performing retailers. Finally, they may be downplaying concerns about the potential drop in consumer spending due to inflationary pressures and they may have concerns about their liquidity, particularly for their Nashville project
Tanger Factory Outlet Centers is a self-administered and self-managed real estate investment trust, which focuses on developing, acquiring, owning, operating and managing outlet shopping centers. The company's outlet centers and other assets are held by, and all of its operations are conducted by, Tanger Properties Limited Partnership and subsidiaries (Operating Partnership). The company owns the majority of the units of partnership interest issued by the Operating Partnership through its two wholly-owned subsidiaries, Tanger GP Trust and Tanger LP Trust. Tanger GP Trust controls the Operating Partnership as its sole general partner. Tanger LP Trust holds a limited partnership interest.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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