GO
Loading...

New Catalyst for Department Stores Stocks?

The traders were closely watching action in retail on Thursday, after Dillard’s said they were forming a REIT subsidiary. The news sent shares to a 52-week high and lifted rivals on speculation other companies could make a similar move.

Why do this?

According to CNBC’s Bob Pisani, because for some retailers, the value is not in the brand or the merchandise, or the CEO vision — it's in the real estate.

Dillard's, whose stores are concentrated in the U.S. Southeast, owns 88 percent of the space occupied by its 309 stores – and as a REIT it can more easily borrow against the value of the property it owns.

So who may be next?

When activist investor William Ackman's Pershing Square Capital took a 16.5 percent stake in JC Penney in October, the shares rose on the assumption he would try to get the company to create a REIT to take advantage of its real estate. Penney owns 37.5 percent of the 1,108 department stores it runs.

And Ackman tried unsuccessfully to get discount retailer Target to create a REIT in 2008.

How should you trade?

Karen Finerman admits that the move unlocks value and could even put a floor under retailers.

However, she doesn’t think this should be your catalyst to establish a new position. “Don’t jump in on this,” she says. “It’s probably a one-off.”




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Jan. 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (GLD) Puts; Terranova Owns (UPL); Terranova Owns (VRTS); Terranova Owns (PVH); Terranova Owns (GM); Terranova Owns (CVI); Terranova Owns (CNQ); Terranova Owns (LTD); Terranova Owns (C); Terranova Owns (PEP); Terranova Owns (CPX); Terranova Owns (ARUN); Terranova Owns (MS); Terranova Owns (RSH); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is short (IJR); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman's firm owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman owns (BP); Finerman's firm owns (BP); Finerman owns (C); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman's firm owns (MCD); Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (TGT): Finerman's firm owns (WMT)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Are Long The Euro
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Are Short The Yen

For Simon Baker
Baker Ave Owns (FFIV)
Baker Ave Owns (GDXJ)
Baker Ave Owns (GLD)
Baker Ave Owns (MOS)
Baker Ave Owns (T)
Baker Ave Owns (UNH)
Baker Ave Is Long the S&P

For Barry Ritholtz
Ritholtz has no disclosures

For Dennis Gartman
Funds Managed by Dennis Gartman are short Yen
Funds Managed by Dennis Gartman are short Sterling
Funds Managed by Dennis Gartman are long gold
Funds Managed by Dennis Gartman are long silver
Funds Managed by Dennis Gartman are long Natural Gas
Funds Managed by Dennis Gartman are long the Swiss Franc
Funds managed by Dennis Gartman are short the Euro

For Scott Davis
As of 12/31/10, Morgan Stanley owned 1% or more of (HON) common equity
Within the last 12 months, Morgan Stanley has received compensation for IB services from (GE), (HON), (TYC)
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from (GE), (HON), (TYC)
Within the last 12 months, Morgan Stanley has received compensation for non-investment banking services from (GE), (HON), (TYC)
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to (GE), (HON), (TYC)
Morgan Stanley & Co. is a market maker in (GE), (HON), (TYC)

For Brian Stutland
Stutland has no disclosures.

For Dan Niles
Alpha One Capital Partners has a position in (IBM)

For Aaron Rakers
Stifel Nicolaus is a market maker in (HPQ)
Stifel Nicolaus or an affiliate provides or in past 12 months has provided investment banking services to (HPQ)
(HPQ) is or in the past 12 months was a client of Stifel Nicolaus or an affiliate

GE is the parent company of CNBC

CNBC.com with wires.

Symbol
Price
 
Change
%Change
DDS
---
JCP
---
TGT
---

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report