Imagine it. Your fund manager has just sold a stock that on almost every measure, from valuation and consensus to intuition and common sense, looks cheap. Why aren’t they buying rather than selling?
Seeking an explanation for what seems like a poor decision, their response dumbfounds you. “We sold down because everyone else is doing it.”
It sounds ridiculous, doesn’t it? Until you realise this is the only possible excuse for a gaggle of index fund managers (a collective noun for the species has yet to be invented) selling down Scentre Group, a listed Australian property trust that owns arguably one of the best portfolios of retail assets in the world.
In July 2016, when the price hit around $5.30, the market (presumably) agreed with that view. As of 27 October 2017, with perceptions changing, it has fallen 24%. At one point the stock was trading below the underlying value of its assets. That price ignored the inherent value of the (perpetual) right to manage, develop and lease this circa $34bn portfolio.