Brian McMorris'  Instablog

It has been a few weeks since the last post on the story of General Growth Companies and Pershing Square's Bill Ackman. By all accounts, everything is going as originally speculated.

After a brief run to $3 per share, the stock has pulled back down to $1.65. This is not due to any fundamental change, but just the fact the buzz wore off the stock, temporarily. If anything, the recent court rulings and general improvement in the economy and banking sector bode well for General Growth. The objective of Pershing Square and most likely the bankruptcy court, is to buy enough time for the credit markets to thaw sufficiently that financing can be extended for the properties in question.

This is the conclusion of the attached presentation. The judge appears to be leaning towards a series of "cram downs" whereby the court will force the lenders to each property to extend terms of the mortgages and loans in such a way that both the lender and the borrower are made whole. This would be the ideal situation for General Growth and its shareholders as there might not be any dilution at all under this circumstance and no property liquidation.

I purchased more shares last week and will continue to add periodically as the story plays out and the prospects become clearer.

Here is a lengthy presentation on the status of GGP (now GGWPQ.PK as it trades OTC as a pink sheet) from Pershing Square in late May. Special attention should be paid to the financial models in the middle of the presentation. Ackman is using these same arguments in bankruptcy court in his role as largest individual shareholder and board director:

GGP Presentation 5.27.2009

Disclosure: No Positions