Zero Hedge is well aware that our regulatory friends at the SEC and FINRA enjoy going through our articles in search of the "next big scam." We are always happy to make their lives a little easier and not only connect the dots but give them everything they need on a silver platter so that even a green securities lawyer, 4 hours fresh out of law school, would be able to comprehend and litigate.
A few weeks ago I caught on a troubling trend whereby Merrill Lynch/Bank of America embarked on an epic quest to underwrite equity follow on offerings for a vast majority of the lowest quality REITs including
Kimco,
ProLogis,
Duke Realty and others. I say lowest quality, because Merrill's own analysts had a Sell rating on these names as recently as March 31 (for Kimco) and January 6 (for ProLogis). How the global economy has really changed for the better of REITs since then is still a mystery to me. But I digress.
In the true and tried Wall Street mantra "if something works why fix it" late last week (April 16th to be exact: bear with me, this will be very relevant in a moment) Merrill Lynch also underwrote yet another follow on offering, this time for marginal Southwest-focused REIT Weingarten Realty Investors (checking the holders yields no real surprises:
Cohen and Steers at number 5, with 3.3 million shares; much more ominously for new shareholders, Barclays Global Investors is at number 1...readers who have been following the quant theme at ZH should appreciate the connection). And while Merrill analyst Steve Schmidt has not upgraded the company yet, presumably as he is still restricted while the 4.2 million overallotment is exercised, I am willing to place a bet for $xxx - you name it - with any reader, that within 3 days WRI will see an upgrade from Sell to at least Neutral by Mr. Schmidt, with a report titled "Upgrade to ___ on improved balance sheet." (disclaimer: Zero Hedge has absolutely no insight what occurs inside BofA/ML's research department, but can use its head).
Yet, as much as I want to keep focusing on Merrill Lynch, it is another company that piques the interest on this occasion.
