Which means, if the two companies declare bankruptcy and were liquidated (isn’t this the worst case senario?), shareholders would get over 10X and 2.8X their cost of shares at current prices of $0.50 (CC) and $4.20 (GGP). Assuming the companies lose some more money, shareholders would still reap a tidy profit in a liquidation.

Circuit City: Estimated quarterly loss $170MM this quarter. Reducing their book value from ~ $1.2B to ~$1.0B leaving a Price to Book ratio of 0.08X. Put another way, you can buy 100% of CC stock and control the company with ~$85MM and control over $960MM of commercial real estate. I can’t imagine what is causing such a tremendous discrepancy between value and price, but I’m going to be happily buying down to $0.01/share.

GGP: Same story. Their assets are over $2B greater than their liabilities. Current price action values the company at $1.12B making it pretty undervalued as well.

What’s causing all this? My guess is the many smaller hedge funds and other institutional holders are facing extraordinary redemption requests and are being forced to sell their holdings. This could only go on for so long, but until investors are able (willing?) to stomach the discomfort, we may see these and other distressed companies at firesale prices.