DDS - Dillard's

[Gregmal]

With all due respect Rulenumberone, and perhaps because the thread title was changed, but youre focusing on the wrong things. This was basically a math trade. Short interest was nearly 90% of float, on a stock that’s exhibited certain previous patterns, and that setup the move for a short squeeze, taking this from 59/60 to 70 in under 5 days. It was never represented as anything more.

[Cardboard]

In any case, he is wrong on his math too as sales are not going down, company is not losing money and since when do we value retailers solely based on land or value of non-performing stores real estate?

 

This ain't SHLD and it only takes 30 seconds by looking at their financial statements to figure that out. Not saying it is a growing retailer but, I see zero material in the posts by Rulenumberone to convince me to take a short position either.

 

Cardboard

 

 

[RuleNumberOne]

Cardboard,

 

Your claim that sales are not going down and the company is not losing money is as bad as the moxreports claim of real estate value. Evidence in the latest earnings release is very clear.

 

From the latest earnings release linked below:

 

Same store sales went down 2% this quarter.

 

Revenue went from $1468 million to $1427 million YoY.

 

Compared to the year ago quarter, gross profit went from $483 million to $432 million.

 

Cost of sales went up to 72.3% of sales from 69.3% of sales.

 

SG&A expense and rental expense stayed the same. Interest expense went down $ 2 million.

 

Pre-tax loss of $52 million.

 

The company is leading a hand to mouth existence or worse (depreciation and amortization + net income = 0.) What about capex, e.g. broken air conditioners or escalators?

 

 

https://investor.dillards.com/press-releases/press-release-details/2019/Dillards-Inc-Reports-Second-Quarter-Results/default.aspx

 

In any case, he is wrong on his math too as sales are not going down, company is not losing money and since when do we value retailers solely based on land or value of non-performing stores real estate?

 

This ain't SHLD and it only takes 30 seconds by looking at their financial statements to figure that out. Not saying it is a growing retailer but, I see zero material in the posts by Rulenumberone to convince me to take a short position either.

 

Cardboard

[Gregmal]

Cardboard don't forget, this is CoBF. The land of make believe. Where MDXG from 2.47-3.90 = ...disqualified!!! You didn't hold it long enough! and 59-70 in 3 days = you're missing something! Them fundamentals are bad!

[writser]

Don't be salty, you made a great trade. Pat on the back!

 

Serious question: do you actually think the squeeze thesis is any good on a fundamental basis? Because this seems a bit like a 'Burford-trade' in reverse: generate a lot of hype (in this case about a short squeeze in a stock with a very low float) and the desired result will follow, regardless of the fundamentals. But shares are actually down today and the borrow fee is also down since August. I thought the 'mox-report' wasn't very convincing and in fact it looks pretty much like something Muddywaters could have written. Also, the DDS super squeeze story has been around for years - looks like people are starting to anticipate / expect it.

 

Not that there is anything wrong with making money because of people hyping a possible short squeeze rather than an actual short squeeze occurring. I made some money on the short side in Burford as well despite having no strong view on fundamentals.

 

I agree with you that DDS is an interesting stock on multiple levels.

[Gregmal]

Don't be salty, you made a great trade. Pat on the back!

 

Serious question: do you actually think the squeeze thesis is any good on a fundamental basis? Because this seems a bit like a 'Burford-trade' in reverse: generate a lot of hype (in this case about a short squeeze in a stock with a very low float) and the desired result will follow, regardless of the fundamentals. But shares are actually down today and the borrow fee is also down since August. I thought the 'mox-report' wasn't very convincing and in fact it looks pretty much like something Muddywaters could have written. Also, the DDS super squeeze story has been around for years - looks like people are starting to anticipate / expect it.

 

Not that there is anything wrong with making money because of people hyping a possible short squeeze rather than an actual short squeeze occurring. I made some money on the short side in Burford as well despite having no strong view on fundamentals.

 

I agree with you that DDS is an interesting stock on multiple levels.

 

I don't really think they have much in common. MW on Burford was basically loud screaming of things people already knew, egregious misrepresentation, and capitalizing on reputational impact in order to more or less move the market. Mox report was pretty straight forward. Its a math trade. DDS as a retailer is kind of crummy, but not the worst out there. To a certain extent, sure; word getting out about short interest and the stock getting squeezed is a bit of self fulfilling prophecy. But its also a play on understanding market psychology. Ive been on the wrong end of short squeezes before; knowing what that feels like helps understand what drives this(it still may get squeezed more btw). So on that front, Pearson was 100% clear what he was looking to do here and I thought represented things in a fairly straight forward manner. Whereas Muddy Waters on the other hand...

 

The home run scenario, again just analyzing the math end of this trade, would have been a repurchase number around what Unemon suggested. Free float is now significantly below shares short. Which then points to the obvious fact that some holders of the stock, that arent part of the free float are lending out the stock. Which if that's the case, you better believe once it is public what the difference between short interest and float is, guess what those holders are doing? Pulling the borrow. Thats where the really fireworks would happen.

 

 

EDIT: and btw, if you want to see a real short piece. Check out Pearson's Forcefield Energy writeup. Or just check the FNRG chart. Gives new meaning to the term "killing it".

[writser]

you better believe once it is public what the difference between short interest and float is, guess what those holders are doing? Pulling the borrow. Thats where the really fireworks would happen.

 

I don't think it is a secret, exactly .. And second, where I think the analysis is flawed: I think it is extremely unlikely that Blackrock, Vanguard, State Street, Northern Trust etc. will pull the borrow in an orchestrated short squeeze. They are in the business of tracking indices and being boring asset managers- not in the business of generating squeezes for short-term profits. Even the founding family is probably happy with the status quo: lend out the shares for a juicy fee while letting others depress the price at which they can buy back shares. What are they gaining from a short-squeeze? Some short term gains (and they'd only be able to sell a small amount of shares), a lot of reputational damage and a pause in their buyback program.

[Gregmal]

you better believe once it is public what the difference between short interest and float is, guess what those holders are doing? Pulling the borrow. Thats where the really fireworks would happen.

 

I don't think it is a secret, exactly .. And second, where I think the analysis is flawed: the short interest is 77% of the free float. Yes, that number, or whatever it currently is, is high. However, I think it is unlikely that Blackrock, Vanguard, State Street, Northern Trust etc. will pull the borrow in an orchestrated short squeeze. They are in the business of tracking indices - not in the business of generating squeezes for short-term profits. Even the founding family is probably happy with the status quo: lend out the shares for a juicy fee while letting others depress the price at which they can buy back shares. What are they gaining from a short-squeeze? Some short term gains (and they'd only be able to sell a small amount of shares), a lot of reputational damage and a pause in their buyback program.

 

You don't think perhaps, lets say a desperate hedge fund manager who's badly in need of some returns and could also benefit from a public "win" wouldn't do such a thing? You dont think David Einhorn(who's long been little more than a trader of the stock) would do such a thing?

[writser]

Sure. I didn't name Einhorn in my post, did I? I was just pointing out who in my opinion will not pull the borrow and these investors happen to own ~13m shares or whatever.

[Gregmal]

Sure. I didn't name Einhorn in my post, did I? I was just pointing out who in my opinion will not pull the borrow and these investors happen to own ~13m shares or whatever.

 

Got it. Just some fun discussion on a unique name that's worth keeping an eye on.

[writser]

Yes. FWIW I do see some potential for some short shenanigans. I just thought that the whole 'look they bought back a lot of shares and nobody knows about it, wait for the 10Q' thesis was a bit overdone. Honestly if you use terms like 'upside perfect storm', 'violent upward price spikes', 'hyper-aggressive buybacks' and 'kitchen sink PR gambit' (wtf..) in your reports you are just as promotional as Muddy Waters. Only on the long side and then nobody cares.

 

DDS has been buying back shares for ages. Everybody knows about it. The huge short interest isn't exactly a secret either. I think the article contained zero new insights. They simply rehashed their old articles (which both appear both to have been posted around the yearly high?)  but the trade worked out nicely.

[RuleNumberOne]

There is no need for any shorts to cover unless the company becomes profitable.

 

A stock that is guaranteed to go to $0 should have all its shares outstanding shorted at $30.

A stock that is guaranteed to go to $0 + $30 should have all its shares outstanding shorted at $30 + $30.

 

If you can't turn a profit when the US consumer is super-healthy and in a big spending mood, you are guaranteed to go bust during the next recession. A few days ago Barron's presented a list of retailers that filed for bankruptcy this year. Dillards will eventually join that list.

 

Shorts should just be patient.

 

[Cardboard]

Hey RuleNumberOne, if you wanted to at least properly argue with what I stated, it would be wiser to highlight full year number comparisons instead of what happened in the last quarter which is slowest for a retailer.

 

Maybe that you are short or whatever and I don't really care but, if you want to spread the truth as you claim to be then please try to do so. Same store sales declining 1 or 2% is not the end of the world and guaranteed bankruptcy in case you didn't know.

 

Cardboard

 

 

[RuleNumberOne]

If it weren't for gain on asset sales it would look worse.

 

If it makes you happier, we can look at 5-year comparisons instead of 1-year.

 

The founder's 74-year-old son is perhaps looking at 50-year comparisons and buying back stock. He joined the company in 1967.

 

Hey RuleNumberOne, if you wanted to at least properly argue with what I stated, it would be wiser to highlight full year number comparisons instead of what happened in the last quarter which is slowest for a retailer.

 

Maybe that you are short or whatever and I don't really care but, if you want to spread the truth as you claim to be then please try to do so. Same store sales declining 1 or 2% is not the end of the world and guaranteed bankruptcy in case you didn't know.

 

Cardboard

[Gregmal]

On paper, yea just hold the short. In actuality, it’s not that simple. A lot can happen that is out of your control or forces you to change direction. What’s unique about some of these perspectives is that the authors are predominantly short biased. So they have a very deep understanding of the mechanics at play here.

 

Rulenumberone, question. Theoretical. You’re short, and the stock goes against you 30%. You’re prime informs you that your borrow is gone. You have 3 days to buy in. Next day you’re notified that they have a few shares to borrow but the neg went from 15% to 60%. Meaning to keep the trade on you’re paying 5% a month to borrow. What do you do?

[Cardboard]

With the amount of posting that he did and frustration he must have been short European bonds  ???

 

I would need an emoticon with a hanged man!

 

Cardboard

[RuleNumberOne]

As more and more people slowly realize that there isn't going to be any short squeeze, this will continue to drift lower.

 

While people have been waiting for that short squeeze that was supposed to happen after the 10-Q filing, the pump-and-dumpers have been laughing their way to the bank.

 

They said: "Here, buy this bag from me and stand over there. You are going to get a violent short squeeze half an hour before the market close."

 

Hence the term 'bagholders.' The next moxreport could be "rare earths discovered in the Dillards parking lot in Oklahoma, oil in the Dillards in Texas, gold mines in the Dillards in Florida and Iowa. The value of this real estate has been estimated generally at a few tens of billions of dollars (ranging from roughly $750-$800 per share). This will be revealed in an SEC filing 2 weeks from now following which there will be a violent short squeeze."

 

The only squeeze for Dillards is the one that Amazon-Costco-Target-Walmart are collectively putting on.

 

 

[Gregmal]

As more and more people slowly realize that there isn't going to be any short squeeze, this will continue to drift lower.

 

While people have been waiting for that short squeeze that was supposed to happen after the 10-Q filing, the pump-and-dumpers have been laughing their way to the bank.

 

They said: "Here, buy this bag from me and stand over there. You are going to get a violent short squeeze half an hour before the market close."

 

Hence the term 'bagholders.' The next moxreport could be "rare earths discovered in the Dillards parking lot in Oklahoma, oil in the Dillards in Texas, gold mines in the Dillards in Florida and Iowa. The value of this real estate has been estimated generally at a few tens of billions of dollars (ranging from roughly $750-$800 per share). This will be revealed in an SEC filing 2 weeks from now following which there will be a violent short squeeze."

 

The only squeeze for Dillards is the one that Amazon-Costco-Target-Walmart are collectively putting on.

 

Translating much of this and your other comments I get... "if its not a fundamental trade it doesn't count! wah, wah, wah"

 

If you're short, well Im not sorry there was an opportunity to make money while you paid 2.5% this month to suffer paper losses and borrow your shares. If you're not short, then I don't really get why you are so butthurt.

[RuleNumberOne]

It was very dishonorable. moxreport put in a lot of effort formatting his webpages - try making a webpage with tables and graphs as well-designed as he had?

 

But he never bothered to provide any proof for his repeated claim that the real estate was "generally estimated at" $150-$300 per share. Dillards SEC filings revealed sale prices for stores at an average of only $59 per share. With the net debt of $22 per share, it was overvalued.

 

Gullible people who fell for the painstakingly-designed webpage with red fonts, tables, graphs got ripped off. Extremely unethical. Some of them are clearly still holding the stock waiting for that "violent" short squeeze.

 

I am "butthurt" because i don't like honest hardworking people getting ripped off.

 

As more and more people slowly realize that there isn't going to be any short squeeze, this will continue to drift lower.

 

While people have been waiting for that short squeeze that was supposed to happen after the 10-Q filing, the pump-and-dumpers have been laughing their way to the bank.

 

They said: "Here, buy this bag from me and stand over there. You are going to get a violent short squeeze half an hour before the market close."

 

Hence the term 'bagholders.' The next moxreport could be "rare earths discovered in the Dillards parking lot in Oklahoma, oil in the Dillards in Texas, gold mines in the Dillards in Florida and Iowa. The value of this real estate has been estimated generally at a few tens of billions of dollars (ranging from roughly $750-$800 per share). This will be revealed in an SEC filing 2 weeks from now following which there will be a violent short squeeze."

 

The only squeeze for Dillards is the one that Amazon-Costco-Target-Walmart are collectively putting on.

 

Translating much of this and your other comments I get... "if its not a fundamental trade it doesn't count! wah, wah, wah"

 

If you're short, well Im not sorry there was an opportunity to make money while you paid 2.5% this month to suffer paper losses and borrow your shares. If you're not short, then I don't really get why you are so butthurt.

[Gregmal]

It was very dishonorable. moxreport put in a lot of effort formatting his webpages - try making a webpage with tables and graphs as well-designed as he had?

 

But he never bothered to provide any proof for his repeated claim that the real estate was "generally estimated at" $150-$300 per share. Dillards SEC filings revealed sale prices for stores at an average of only $59 per share. With the net debt of $22 per share, it was overvalued.

 

Gullible people who fell for the painstakingly-designed webpage with red fonts, tables, graphs got ripped off. Extremely unethical. Some of them are clearly still holding the stock waiting for that "violent" short squeeze.

 

I am "butthurt" because i don't like honest hardworking people getting ripped off.

 

As more and more people slowly realize that there isn't going to be any short squeeze, this will continue to drift lower.

 

While people have been waiting for that short squeeze that was supposed to happen after the 10-Q filing, the pump-and-dumpers have been laughing their way to the bank.

 

They said: "Here, buy this bag from me and stand over there. You are going to get a violent short squeeze half an hour before the market close."

 

Hence the term 'bagholders.' The next moxreport could be "rare earths discovered in the Dillards parking lot in Oklahoma, oil in the Dillards in Texas, gold mines in the Dillards in Florida and Iowa. The value of this real estate has been estimated generally at a few tens of billions of dollars (ranging from roughly $750-$800 per share). This will be revealed in an SEC filing 2 weeks from now following which there will be a violent short squeeze."

 

The only squeeze for Dillards is the one that Amazon-Costco-Target-Walmart are collectively putting on.

 

Translating much of this and your other comments I get... "if its not a fundamental trade it doesn't count! wah, wah, wah"

 

If you're short, well Im not sorry there was an opportunity to make money while you paid 2.5% this month to suffer paper losses and borrow your shares. If you're not short, then I don't really get why you are so butthurt.

 

The premise of the investment(one he still apparently held as of the close today), was very straight forward. Sure, as has been mentioned, there was some salesmanship to the verbiage. But it was totally transparent and no different than anything you'll see anywhere else, from Seeking Alpha, to Twitter, to the latest JP Morgan analyst report.

 

Ultimately, no one was duped as each and every individual who hits the buy and sell buttons is responsible for themselves. If what you are describing truly upset you so much, I can only imagine the constant state of unease and fury you must be in, I don't know, like, 743 times a day when analysts publish bullshit that investors then chose to act on even though generally speaking, much of it is nonsense...

[Spekulatius]

The trade worked, Cashing. Great for those that did it. Equally, going short now or buying puts may work just as well. I personally don’t think DDS reale state is worth that much and it would be quite difficult and expensive to unlock the value.

 

Some investment are LT bets, some trades are short term bets and both can work.

[SHDL]

Squeeze or no squeeze, I don’t get the sense that this is good short.  The department store business may well be a melting ice cube, but even if it is the evidence so far is that it is a slowly melting one.  The RE may not be worth a ton, but at the current stock price you are getting that for like < $50 per sq foot, which sounds cheap to me — although I admit I am no RE expert.  The management keeps buying back stock and if they keep going the company will be taken private in just a few years.  The cost of borrowing the stock is high and so are the option premiums.

 

I’ve actually been thinking about selling a few long dated puts given the setup. 

[Gregmal]

Getting perky again. Borrow rate to short has gone from 28% a week ago to now over 70%. Up 10% today on just 200K shares volume.

[Gregmal]

Boom. Just like that. Another round trip from high $50's/low $60's to high $60's/low $70's. Not bad for like, the worlds worst retailer with shitty rural locations..... Definitely outperformed the fuck out of my "value investments" the past couple weeks....

[Gregmal]

https://seekingalpha.com/pr/17699031-dillard-s-inc-reports-third-quarter-results

 

Shares could have some giddy up to them today.