With the new year starting, we thought it would be a good idea to reflect on the year that was. And have a look at our highlights and lowlights from some of our team.
Dylan rates the WOW/EDV split as one of the highlights for the year.
“At the time it was announced, we thought it would be a good thing and worth positioning for.”
During February, we published a trade idea to buy WOW when it was around $33.00. It got as high as $42.50. The spin off of EDV meant that those that had WOW, got one share in EDV for every share they held. It’s now trading at $6.81 and was as high as $7.36.
“I continue to be bullish on EDV. Whilst Omicron will slow things down a little in the short term, it is possible it also markets a nearer end to the pandemic. Which means pubs should do well as we come out the other side of the current wave. Their real estate portfolio should not be underestimated either.”
Dylan’s low point for the year was the Evergrande saga.
“This train wreck keeps going…”
Evergrande Real Estate owns more than 1,300 projects in 280 cities, according to their company website. At the end of June, it was committed to building the equivalent of about 1.4 million individual properties, according to Capital Economics.
The group went far beyond home building. With investments in electric vehicles (Evergrande New Energy Auto), a theme park (Evergrande Fairyland), a soccer club (Guanzhou F.C.) and a mineral water and food company (Evergrande Spring), among others. With more than 200 offshore and almost 2,000 domestic subsidiaries, Evergrande had about 2 trillion yuan ($314 billion) in assets. Equivalent to 2% of China’s gross domestic product, according to Goldman Sachs Group Inc. calculations.
The group has gained infamy for becoming China’s most indebted developer, with more than $300 billion worth of liabilities. When it said it was going to have trouble meeting debt obligations, it sent ripples around the world…
Obviously if a company this big fails, it has massive flow on effects through to things like steel, and onto iron ore demand.
“News has been relatively quiet in the lead up to Christmas. But the announcement that its shares have been placed in a trading hold mean the train wreck rolls on…”
Apartment buildings at Evergrande’s Life in Venice real estate and tourism development in Qidong, Jiangsu province
© Qilai Shen/Bloomberg published in the Financial Times
“My golf handicap didn’t improve through the year either…”
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