How Hedge Funds Profited Off The Pain Of Malls

Catie McKee was nervous. It was last October, and the 31-year-old hedge fund analyst, who had been scrutinizing the mortgages on the nation’s malls, was convinced that some of those malls would default on their loans. She and her colleagues had even bet a substantial amount of money on that likelihood. Ms. McKee was about to make her case to Carl Icahn, one of the country’s best-known investors, who had made a similar wager and invited her team to discuss the trade. Nothing would bolster her confidence — and the prospects for her trade — more than if the billionaire and one-time corporate raider backed her up. She needn’t have worried. As Ms. McKee sat in Mr. Icahn’s wood-paneled boardroom with a sweeping view of Manhattan’s Central Park, discussing her thesis with the 83-year-old investor, she realized they shared the same outlook. Both agreed that e-commerce, changing consumer habits and evolving demographics had pummeled all malls to some degree in recent years, but some were far worse off than others. So by betting on their demise, both could profit handsomely — which they did. Read more at The New York Times.