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@petec i haven't been following this name long enough - so I'm probably missing a lot of things. if there was some "politics" involved in initially keeping the dividend he should have put that aside and cut it right away and done what was best for the business. @tylerdurden fair enough. My initial thesis was that if CFs were going up the dividend should be safe. that was my basic thesis, i kept it simple, whether right or wrong. cutting the div means my thesis was wrong. i don't want to change my thesis and drift. i am less comfortable in the name now but that is because of how i initially approached this trade. I should clarify that i don't think a dividend cut is a bad thing for the business...i think it is a bad thing for the credibility of management and that could have a lingering impact on how the market values the stock going forward. I've never seen a situation when a stock does well after a dividend cut even if it is the right thing to do. Yeah it could be different this time..who knows. I actually own some 2021 options so i would like the stock to go up - i guess we will learn how the market reacts to it. Anyways the market got it right here, and anticipated the dividend cut pretty efficiently.

There's another way to view it, that jumps right out of the numbers - the lower bound of 3.1B FCF, with a 2.3B div, leaves 800m. That easily covers interest payments. But it does not leave enough for transformation, which is front-loaded with expenses whereas value accrues later. But the transformation numbers are new info, and actually stem from fulfilment of integration synergies sooner than promised. So now they need extra 450-650m of cash to create >800m of recurring EBITDA gain. Sounds like a reasonable capital allocation plan. Considering the manner and pace that integration synergies materialised, would you give up that opp just to maintain the dividend? And that's not to say that the results are not a mixed bag. And certainly if one subscribed to Longinvestor's view that the industry is up to a Sisyphean task, investing in CTL would not make much sense. I'm not too sure what you mean, if they needed 450-650M after the synergies were reached to create extra ebitda, whether they reached the goal early or not, doesn't that mean the dividend was always in trouble to begin with? Either way i wouldn't buy this stock even at these levels. It might be cheap but i think it will stay cheap.

Yeah if you are able use the full withheld amount as a tax credit, it makes a lot more sense and you should get a solid return if they return most of the cash this year, which doesn't seem to be an issue considering the liquidity of most of their assets..

They have been selling everything. Check their filings. They only had 5% cash at year end. and their fund has been doing poorly and they are getting redemptions. Another stock i follow CNX has also gotten crushed recently which was a big holding of theirs....now with CTL (their largest holding) going against them i am sure investors aren't happy. Oh and here is what they said about CTL's dividend in their annual letter recently "The dividend moved back up to a mid-teens yield with minimal chance of any cut.".......only to have CTL cut the dividend a couple weeks after. Wasn't southeastern very active in pushing for the CTL and Level 3 merger? How can you be so actively involved and misread the situation so badly? These guys don't seem to be in touch with reality. If they did push for the merger, you have to wonder how good that analysis was considering how badly they misjudged the safety of the dividend.

Not sure why people are bullish on the dividend cut. Cutting the dividend after positively confirming the dividend is safe is a big hit to the credibility of the CEO. The same CEO you are relying on for the integration. The same CEO analysts/shareholders will always doubt going forward. It also shows lack of confidence in the business prospects and future cash flows. Remember the yield was high because of the stock price, not because the payout ratio was too high. My opinion is that this type of company should be paying most of their income as dividends - this is not a growth stock. You could say it is priced in at 20% FCF yield but the act of cutting the dividend tells you that 20% yield may not be 20% in a few years. To me the dividend was the indirect thesis for the investment. maintaining the dividend meant cash flows were increasing, which was the point of the integration. Cutting the dividend telegraphs that cash flows are not what they projected and if cash flows decrease why invest here. Even if they de-lever it doesn't mean much if CFs are shrinking.

Edit: never mind my previous post I would have to think through how this would be taxed as a foreigner. Like i said in my previous post i i got hit on my tax slip with a dividend for tax purposes on a tax free spin which should have been a ROC. Even though this was wrong the i had to back it out manually and hope i didn't get audited.

Makes sense, thanks.....for the reasons you pointed out, i assumed mgmt/the exchange would "guide" the market initially because of the complexities in valuing 2 companies after a separation - but when trading begins the market would decide. The tax cost basis is a good point, i would assume that if mgmt gives guidance in terms of how tax basis should be allocated - this should approximate their assigned values to each business.

No, no, no. The only thing that matters is at what price people are willing to buy and sell Co A and Co B. Maybe the next day Co A opens at $1 dollar and Co B opens at $100 dollar... there is no formula, or any rule. The price of the new stock can be lower or higher than the price of the original company. Interesting, and if the case, i was completely off. i understand that the trading on that day could cause the price to fluctuate to anything. I assumed that that there was some type of mechanism/guidance on the initial spin. I noticed that there is a "when issued" market before the spin off, this might be the mechanism for the market to try and determine the potential spin off price. I need to look more into this...thanks. The let the market figure it out makes sense to me, idk why i assumed otherwise, it must be bc i have gone insane.

You are right i edited the post thanks...not thinking straight today

So I want to understand the impact of a spin. Let me know if i am correct. Company A stock price is $10. The Company will spin a B co. Every share of A will get one share of B. Before the spin, the company will assign a value to Co A (say 80%) and Co B (20%) and will notify the exchange. On the day of the spin the exchange will assign the opening trading price of Co A at $8, and Co B will trade at $2 - based on the allocation the company has specified. Is this how it works? The company i am looking at has not mentioned anywhere the value allocation so i have no idea where to find this info before the spin (i looked at all their filings/CCs etc). Even checked the OCC site for the impact on options after the spin....but i found nothing. anybody know if there is a way to get this info?.....I might have to call IR bc i can't find this anywhere, but thought i would try here first.

he can't buy...he is getting well deserved redemptions. I thought the losses stopped for other reasons.

For the bears, a lot of you are arguing that if you walk into a sears you should know not to buy the stock. I think you are mixing up the business with the stock. The issue with sears is not the stores - because the stores could be put to better use to generate cash flows. The issue with sears is that fool lampert. the assets have the value. But the assets ONLY HAVE VALUE OUTSIDE OF SEARS. Keeping the assets inside of sears burns value. That is the key to the thesis. That is why baboon berkowitz keeps talking up the net asset value. His values are based on what the assets are worth to a viable business outside of sears. But lampert is in the way, but i knew this going in. He is the catalyst for the stock price, but at the same time he is also the destroyer of the business. I saw some people ask why lampert kept the stores open so long - he kept the stores open for years and took losses because he wanted to get customers on the SYW system. He wanted to build shopping habits/loyalty/get them hooked so that when they closed the stores later, he would keep these customers on the system. He keeps on saying that he kept the stores open to save jobs - but he is full of shit....he did it only for SYW. That is why baboon berkowitz called the losses voluntary. Because these stores could have been closed years ago, redeveloped, and they would be making the company money right now from tenants. Instead lampert took losses, AND HE SPENT tons of money to build SYW...and SYW is not working - I know SYW it is not working because there is a note in the 10K that shows SSS and the impact from online sales, and online sales are not working. So Lampert destroyed tons of value through SYW. If you look at SYW, that platform most likely has more value than people think - they have info/access on millions of shoppers - BUT AGAIN IT ONLY HAS VALUE OUTSIDE OF SEARS to a buyer that can make good use of it. This goes back to the issue, all the assets have value outside of sears.....in a CC the company even mentioned that one or more of their competitors was interested but hesitant to use their home services business because it was still under sears. If you look at the business - it is terrible on many levels - they don't have a viable business. The bears are right here. But the stock price compared to assets is not terrible. But again lampert is in the way. He has something to prove - I am actually hoping he fails miserably. I don't like the guy - he is a real douche. He wants the fame of "transforming" sears - that is why he is doing this this - and he is doing this at the expense of all stakeholders (employees, vendors, shareholders etc).

I think i was wrong on this stock...i am out

Real estate is local and aggregate supply does not mean that much. If SRG owns a Sears box, it does not matter much if SHLD owns another Sears box 20 miles away as they don’t really compete with each other for tenants. I don't believe this is true. It depends who the tenant is. I would assume the vast majority of Sears box tenants would not be local mom and pop shops, they would be national brands with a lot flexibility to expand where they see fit. If I am a tenant that has a national presence or a new international business looking to expand in the US, why would I not look at all available properties? I would look at all available options, weigh the pros and cons, and then decide based on the best market/location to maximize cash flows.

I don't own this stock, and i didn't see this brought up in thread, but it is something i would be asking as shareholder. Most of Seritage are Sears stores. If Sears files then that would hurt Seritage obviously. But what if Sears does not file. The reason Jerk-pert placed more Sears stores in Seritage is bc the stores are too big, and he wants to reconfigure these stores to make them smaller. Sears now has around 580+ Sears stores, and about 150+ of these are in Seritage. People are worried that the company files and you would get a flood of properties hitting the market causing an oversupply (let's ignore the CF issues that would arise from losing Sears as a tenant). But, the remaining stores that Sears owns or has a below market lease are available for redevelopment right now. All of them. So in effect Seritage is already competing with supply from Sears. This issue brings up several questions, but most importantly is there enough demand for everyone to win, or does this hurt Seritage short term in ways that can't be quantified..and other questions. This might not change the thesis but it might impact your returns on the stock and pace of redevelopment. I believe this would be a good question for management if you own the stock. I am saying this because i want someone to ask and want to know the answer.