This morning I wake up to see the following analyst coverage of Prologis (PLD):

Oppenheimer initiates (emphasis mine) Prologis (PLD) with an Outperform, Target $50.

Initiates with an outperform?  I am so baffled by this one that I really don’t know what to say.  What a horrible assessment of this company.  How many of the entities entities were you able to analyze?  This thing is way too complex to even try to assess a value other than the fact that the path of least resistance is zero.  Is this analyst a CFA?  If he is, he has just discredited that designation.

RBC Capital downgrades PLD to Sector Perform from outperform.  Target lowered from $60 to $33.

Sector perform?  Commercial REITs are the most toxic sector in the universe right now.  The same paper exists in the commercial market that does in residential.  The problem?  Commercial paper is more leveraged.  FAR more leveraged.

Deutsche Bank downgrades shares to Hold from Buy.  Target lowered from $58 to $36.

Hold?  Don’t buy it but hold it?  Word to the wise: If you don’t want to buy something, you shouldn’t want to hold it.

Are any of these analysts reading the financial statements?  Are they reading the same ones I am?  How can they possibly think that the common stock of this company is survivable?

My target for this stock remains the same.  0.

For a thorough analysis of this company, see Stripnomics.

Peace

Prologis (PLD) announces they can’t make their earnings.

This is the first of many shortfalls this company will announce.  Read their financial statements.  By definition, their common must go to zero.  Why?  Because the fate of the company is tied to the price of their equity.  As the price of the equity falls, the probability of failure rises.  With the opening price tomorrow, the equity will tip to a price that makes the path to zero certain.  This was an awesome call by Richard Woon.

Peace

Sometimes, things are so obvious that they are obsequiously hard to deny.  Case in point: a company that I own puts in, Prologis (PLD).  What is my thesis on this company?  First and foremost, this was brought to me by one of my colleagues at The Tinker Factory.  For a full view of his blog and his analysis click here.  It is really quite easy to explain.  Walk with me and talk with me.  I will run you through it quickly.  It’ll be just as if we are….at a party!

When we arrive at the party, the party and the counterparty start to party, then a party ensues.  Now the party is partying with the counterparty and all the parties join up and it is some magical financial RAVE type of event and everyone is feelin’ foot loose and fancy free and someone says every once in a while that the party should come down, but the party must go on and everyone at the party is now drunk and whoever rocks the party always rocks the party all night.  The party and counterparty aren’t around so they all decide to smoke some hookah and the next thing you know the counterparty becomes the party. Until he isn’t.  At some point that tug of war becomes so warped and out of proportion that the party just keeps countering the counterparty and when the police come everyone quiets down until the counterparty sues the party.  Uh OH!  You said that when whoever is now rockin’ the party rocks the party all night.  She will until she won’t. Until she doesn’t. But then the musical chairs became so obscenely weird that people were actually thinking this is not just any normal party.  After all how did so much partying just lead to the fact that whoever rocks the party always knows that the counterparty may not be in the mood if you counter the countering of the party.   Never sue each other over a party. The counterparty says that he doesn’t remember if the party went until the original party started.

You see what I mean.

Nothing is as it seems.

Is this really a party?

Oh know.

Or i mean NO!

Ouch.

Where is the party?

You get the point.  When nobody knows what is what and somebody perceives to know who is who, nobody can see anything.  Until they can.  That moment is called volatility.  Getting the timing of that right is the art of a volatilist.

The financial statements of this company look like a great big party.  Whoever is rockin’ the party is rockin’ the party, but the common shareholders will end up with none.  It is, after all, called common stock.

General Rule:

When something becomes common, it isn’t likely to be the most desired thing to have.

Is it?

Is it not ironic that Lehman initiated coverage with an overweight rating of Prologis (PLD) on July 24th?  As Alanis Morissette would say:

And isn’t it ironic… don’t you think
A little too ironic… and yeah I really do think…

Peace

Par-Tay