Pershing Square hedge fund manager Bill Ackman presented his latest short idea at the Great Investors Best Ideas conference in Dallas, TX where he spoke with other prominent hedge fund players such as David Einhorn of Greenlight Capital. At the conference, Ackman laid out a short thesis for Realty Income (NYSE: O).

The rationale behind his play is as such: He thinks Realty Income will suffer because it has tenants with poor credit quality, many with junk ratings. Additionally, he cites the fact that many of its tenants are in the dreaded consumer discretionary segment. This sector has been notably hit due to the recession and many stores have closed down over the past 12+ months. He also mentioned that Realty Income trades at a 7.5% cap rate or so, whereas the private market value is a 10-11% cap rate, a 40% premium.