Some investors who have trimmed the CMBX indices have done labor-intensive research before finalizing their bets. Mr. Mudrick and his analysts walked through all 39 malls in the CMBX 6 index, from the Northridge Fashion Center in Los Angeles to the Town Center in Cobb in Kennesaw, Georgia. In casual clothing, his group paced the perimeters and food courts, taking photos and taking notes.
A slide deck in the Crystal Mall in Waterford, Connecticut that Mudrick Capital was preparing in 2017 when the company first transacted the trade contains maps of the two floors, facts and figures on competing malls, and a summary of the classified tenant categories such as " desperate ”(Gymboree, Claire & # 39; s),“ local / not national ”(Lord & Lady hairdressing salons, FroyoWorld) and“ remarkable ”(Hollister, Aéropostale). A label above a picture of a J.C. Penney and a few shoppers clearly visible in the atrium reads: “Physical interior product okay, but tired. The seller rents mobile cuddly toys for children in the middle of the photo. "
Mr Mudrick said security guards in the shopping malls sometimes harassed him or his employees. "When we took photos, we tried to take it secretly," he recalled.
By the time Ms. McKee, who became Portfolio Manager at MP that year, and Mr. McNamara, met her colleague, Mr. Icahn, their main fund had already invested more than $ 100 million in the short trade. They had hoped to do more, but some of the investors they had recruited were unsure, which is why Ms. McKee was hoping for Mr. Icahn's support.
In February, Ms. McKee and Mr. McNamara formed a fund with $ 30 million in investor capital devoted solely to the mall. Within a month, they had more than doubled that money, so they closed the fund in May and distributed the proceeds to investors. MP continues to keep a short position in its main fund.
"I'm definitely bearish in malls," said Ms. McKee. "But I think it's very individual. I don't think all malls die."