Hey, great earnings. Oh wait, 31.5 million of the 36.5 million in "net income" came from a "gain on fair value measurement of previously held interest in acquired joint venture", otherwise they would have seen considerable deterioration compared to last year.

This company's current stock price is an embarrassment to the efficient market hypothesis. At some point, all of the rosey comments from management will fall on deaf ears, just a matter of when. It's got a multiple that is at best unsustainable and earnings power set to erode, hence the "double barrel" shorting opportunity. Also, its yield is meager relative to the risk associated with its deteriorating fundamentals and compared to its peers with equal levels of risk.

Tanger reminds me a bit of Countrywide in the second quarter of 2007. Even though its fundamentals were eroding in plain site, analysts took comfort in its yet strong earnings power and then light charge offs. Well guess what, the charge offs came like tidal waves, but if you were waiting for confirmation, you wound up with next to nothing but some cheap BofA shares. Tanger owns malls, its tennants are less healthy than they were a year ago and far less healthy than they were two years ago. Vacancies will rise and rental rates will come in lower than many thought. Even a small uptick in vacancies will have an outsized impact on operating margins, exposing the incredible op leverage in a business like Tangers, where most costs are fixed. Debt may also start to look a little high too, but by the time all of these realities become apparent in the financials, it will be too late.

The icing on the cake is the departure of SR Tanger and the promotion of JR Tanger to the CEO job. I'm guessing SR knew his impressive track record and once robust opportunity set had run its course--gotta credit him for the great timing.