Wheeler REIT (NASDAQ: WHLR) stock has been pretty volatile recently. The reason for this is that the equity is the little stub value left after accounting for all of the company’s other bits and pieces. There are, apparently, some $650 million or so of assets. Also some $550 million or so of liabilities. Which makes it sound like they’re ahead by $100 million. But minor tweaks to the model - interest rates, the valuations of buildings - can make that stub equity value pretty much anything we want. Which is why that stub equity value is, in fact, closer to $4 million than anything else. Equity, after all, is always the residual.
It doesn’t help that Wheeler REIT is also making stonking losses. OK, to be fair, much of that is non-cash on changes in liability valuations. But this is substantial enough that dividends are accumulating on the preferreds and thus the REIT isn’t paying a common dividend. Which, for a business structure meant to pay common dividends isn’t a good idea perhaps. There’s even been some work on trying to unwind certain parts of the capital structure to as to deal with this.
Wheeler REIT stock price from Google Finance
As we say, the equity valuation is the stub value between those two large numbers, the hopeful asset value and the liabilities valuation. Which leads to things like this in Wheeler REIT stock: “Wheeler REIT (NASDAQ: WHLR) stock is up 200% and change postmarket last night and premarket today. This is also on heavy volumes, several times normal daily turnover. There’s no specific news from or about the company. But there is a massive short position - which we think has just been squeezed. This is not on the basis of any specific information, this is just from observation.”
Something we repeatedly note around here. Once a stock has been put into play - once the speculators have noted it, played with it - then that stock tends to remain in play for some time. There are, after all, some 4,000 or so listed US stocks (before the OTC) and no one is going to know all of them. Something comes to the attention of the hoddler crowd and it’s likely to remain on their radar screens. Which is what we think is happening here. Nothing particularly objective moving the WHLR stock price, just the ebb and flow of speculative thoughts.
