I just met with Eduardo Elsztain founder of Irsa and Cresud (stock symbols in NY, IRS and CRESY). The meeting was around 90 minutes long. Eduardo has put together the largest office building, land, hotel, residential and shopping mall company in Argentina that is made of three holding companies: Irsa, Cresud and Alto Palermo. Unfortunately he has assembled a complicated ownership structure in which some of his companies own parts of his other companies making the whole thing very confusing. Having said this there´s no doubt that the properties that are owned by this real estate holding companies are prime and that Eduardo is probably running the real estate company with the smallest debt to equity ratio in the world. As opposed to other real estate companies who are all struggling to refinance their debts Eduardo´s companies have very little debt (3 times cash flow) and they do not need refinancing. This is a short post and I don´t have time to explain why I felt that his shares were a good buy in detail but I did. Considering that these shares are 80% down and trading at probably 20c on the dollar in terms of asset value at current Argentine market prices I do think they are a steal and I will buy some. But I am convinced is that the way to get the most value over time for Eduardo is to start selling all the properties he owns and pay the cash proceeds to himself and his shareholders. It is clear that the market, at least now, gives a deep discount to his ownership structure.
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