Guest Hester Posted April 11, 2012 Share Posted April 11, 2012 What are your other short positions, Hester (if you don't mind sharing, obviously)? Sure. I'm short many businesses that rely on China building RE demand. VALE, BHP, Fortescue Metals (listed in Australia) for example. I'm short most large Chinese banks (listed in China) in a basket. Also short some Chinese companies listed in the US that I think are commiting fraud, like CMEDY.PK, GAGA, and FMCN. Also, NLSN, P (probably covering soon), UHT, NOG, and recently SWHC and RGR. Those aren't all, but are my largest positions. If you're curious about the thesis behind any of these just send me a message/email. Link to comment Share on other sites More sharing options...
Guest Hester Posted April 11, 2012 Share Posted April 11, 2012 In case anyone hasn't seen yet, BBY announced later in the day Dunn's resignation was amid a probe into his "personal conduct." http://finance.yahoo.com/news/best-buy-ceo-resigns-amid-233849455.html Link to comment Share on other sites More sharing options...
Rabbitisrich Posted April 11, 2012 Share Posted April 11, 2012 Does BBY discuss the effect of different sales/use tax collection upon state market share? Or has anyone found any research on the matter? Link to comment Share on other sites More sharing options...
turar Posted April 11, 2012 Share Posted April 11, 2012 Thanks Hester! Link to comment Share on other sites More sharing options...
dcollon Posted August 6, 2012 Share Posted August 6, 2012 Congrats to those that are long BBY http://www.bloomberg.com/news/2012-08-06/best-buy-founder-offers-26-a-share-to-buy-retailer.html Link to comment Share on other sites More sharing options...
Cardboard Posted August 7, 2012 Share Posted August 7, 2012 Good arbitrage opportunity? He is basically trying to buy it out for about 4 times EBIT to EV. If you look at their U.S. numbers alone it is a pretty stable and profitable business. They need to axe out the international side. Every analyst is negative on it. I am tempted to take the opposite view. Plus you get a 3.4% yield while you wait. The risk is no conclusion to the offer and to end up with a deteriorating business like a RSH. $10 a share? Seems much more better than RSH although. Cardboard Link to comment Share on other sites More sharing options...
enoch01 Posted August 21, 2012 Share Posted August 21, 2012 Hester - come back! Nice call on this one... Link to comment Share on other sites More sharing options...
stahleyp Posted August 21, 2012 Share Posted August 21, 2012 Hester - come back! Nice call on this one... Where did he go anyway? Link to comment Share on other sites More sharing options...
DCG Posted August 21, 2012 Share Posted August 21, 2012 Earnings down 91% (including a $91 million restructuring charge related to store closure costs.) and shares hit a 9-year low. Link to comment Share on other sites More sharing options...
PlanMaestro Posted September 12, 2012 Share Posted September 12, 2012 Best Buy Takes on RadioShack in Mobile Strip-Mall Push http://www.businessweek.com/news/2012-09-11/best-buy-takes-on-radioshack-in-mobile-strip-mall-push-retail ... because Radio Shack is doing great? Link to comment Share on other sites More sharing options...
meiroy Posted September 26, 2012 Share Posted September 26, 2012 Dynamic Pricing of Goods http://can-turtles-fly.blogspot.com/2012/09/sunday-spectacle-cxcii.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CanTurtlesFly+%28Can+Turtles+Fly%3F+A+Contrarian+Investing+Blog%29&utm_content=Google+Feedfetcher Link to comment Share on other sites More sharing options...
Parsad Posted November 7, 2012 Share Posted November 7, 2012 Anyone still own Best Buy? We tried to load up on Monday...a bet on Schulze making a bid in the coming week...got some, but didn't get what we wanted at the price we had it out at. Up about 10% since then. It's dirt cheap under $15, and I suspect there will be a bid at $21-24 in the next week or two. If he can get it, he needs to start shutting down underperforming stores and cutting costs. Couldn't believe how cheap this thing got. Silly price. Cheers! Link to comment Share on other sites More sharing options...
Cardboard Posted November 7, 2012 Share Posted November 7, 2012 I do own options and I am afraid that they will expire worthless. The agreement is that the bid, if he makes any, would be reviewed by the board and approved or not by mid to late November. If the board turns it down, he will only be able to bring a revised bid forward after the Holidays. If not approved again by the board, he will be able to make it public during or after the shareholders meeting. It is based on Best Buy letting Schulze do due diligence and them waiving the Minnesota law for his bid. So even if he makes a formal bid next week as per the speculation this morning and the board turns it down, we likely won't know the terms. And the more the board drags this issue, the lower a price he will be able to offer. The company has already warned about the coming quarter, meaning really bad earnings. If the market finds out next week or shortly after that Schulze has not made or that his bid has not been approved, I would expect the share price to plummet. My suspicion is that earnings and cash flows that look reasonable now, will look terrible soon enough ala Radio Shack. Hence why I did not buy the stock directly or commit much capital despite what look like a very attractive valuation. Cardboard Link to comment Share on other sites More sharing options...
rjstc Posted November 8, 2012 Share Posted November 8, 2012 Cardboard, Parsad. May I ask where the latest info was obtained from that you referred to about the Schulze bid? I do own BBY and did buy some more over the last few days. Thanks Link to comment Share on other sites More sharing options...
Parsad Posted November 8, 2012 Share Posted November 8, 2012 Cardboard, Parsad. May I ask where the latest info was obtained from that you referred to about the Schulze bid? I do own BBY and did buy some more over the last few days. Thanks I can't remember which filing I read it in, but it was one of the 8-K's that BBY had given him 60 days, plus any extension, to make the first proposal. After that, he can file another proposal in January if the first one is rejected, and then again at the shareholder meeting. With the price where it is, the meeting coming up, and the 60 days closing or past, he has to make a play. Regardless of whether he does or not, I still thought it was cheap and bought some. Cheers! Link to comment Share on other sites More sharing options...
rjstc Posted November 8, 2012 Share Posted November 8, 2012 Fitch: Operational, Market Factors Complicate Successful LBO Chance for Best Buy 10:19 AM ET, 11/08/2012 - Business Wire NEW YORK--(BUSINESS WIRE)--Nov. 8, 2012-- Fitch Ratings believes significant challenges stand in the way of completing a leverage buyout (LBO) of Best Buy Co., Inc. (NYSE: BBY), according to a report published today. Fitch estimates the private holders would need to realize an exit multiple in the low-4x range to earn a 20% IRR. This is based on current Bloomberg consensus estimates (used to build a Base Case model), which project an EBITDA decline of almost 16% from LTM levels through 2017, on a sales decline of 2.4%. Fitch's expectations are more conservative than consensus estimates. If the decline in same-store sales remains in the negative 3%-negative 5% range, as it has over the last four quarters, EBITDA is likely to be further pressured and consensus estimates could prove to be optimistic. Fitch also notes that retail sector LBOs are typically unsuccessful, unless a retailer has strong positioning within its category and the ability to grow market share on an ongoing basis in a segment that is characterized by minimal growth and heavy competition. Adding leverage to a pressured business has only added to a company's woes given the significant high fixed costs and thin margins of the business. The full report, 'Best Buy LBO - Significant Hurdles Remain' is available at, 'www.fitchratings.com.' The report also includes a detailed debt organizational structure and summary covenant analysis for the company's domestic debt. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: Best Buy LBO -- Significant Hurdles Remain http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692990 Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 9, 2012 Share Posted November 9, 2012 I think AAP has a much better chance of being the retail LBO. 1) the cashflows are consistent, 2) "good" retail, AAP is a better business than BBY, 3) ~500MM cash. Interesting that Darren Jackson is the CEO off AAP, previously BBY's CEO. I own AAP, purchased less than a month ago. Good luck though, I analyzed both and I chose AAP. Link to comment Share on other sites More sharing options...
rjstc Posted November 9, 2012 Share Posted November 9, 2012 Best Buy (NYSE: BBY) shares are ticking higher Friday following reports out of the U.K. unit of Reuters that founder Richard Schulze may come in below his intended bid of about $8 billion and that that bid might not happen until the start of next year. Reuters notes that Schulze has performed most of his due diligence and has formed a business plan, his efforts now focus solely on securing financing for a firm bid. He may be able to work with the likes of Apollo Global, TPG Capital, and Leonard Green, with Cerberus Capital no longer in the running, sources said. Since Schulze hinted at a bid of $24 to $25 per share for the big box retailer, Best Buy has fallen about 24 percent to its current level in the low-$15 range, for a market cap of about $5.14 billion. The new price point might be a factor in Schulze's incoming bid; his first range would equal about $10.9 billion including debt. Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 12, 2012 Share Posted November 12, 2012 After doing some reading over the weekend, I initiated a position in BBY today (just for the catalyst). If they sell the European and Asian assets with 1-1.25 bn proceed, at $20.5 (base case) with 30% equity (including Schulze equity), the purchase is doable at ~4x Debt/EBITDAR. Also, they will lose the dividend. There's enough kinks to make it work and I don't think he comes in at 24-26. If you do 30% premium of the last 30 days avg you get to ~21. I think he lowballs at 19.5, then comes in at 20.5-21. Thanks for bringing bby up again. I also added to AAP today, it's an interesting story, I'm thinking somewhere between 90-100, there is a lot a private equity buyer can do...1. company has two headquarters, 2. private label penetration is in the mid 20% whereas for AZO it's around 50%, 3. AP/Inventory ratio still lags, 4. There is no reason for this company to have $500MM cash, it's about $450MM too much. 5. Opportunity to do a lot of sale leasebacks. Link to comment Share on other sites More sharing options...
stahleyp Posted November 16, 2012 Share Posted November 16, 2012 Under $14 Link to comment Share on other sites More sharing options...
BargainValueHunter Posted November 16, 2012 Share Posted November 16, 2012 After doing some reading over the weekend, I initiated a position in BBY today (just for the catalyst). If they sell the European and Asian assets with 1-1.25 bn proceed, at $20.5 (base case) with 30% equity (including Schulze equity), the purchase is doable at ~4x Debt/EBITDAR. Also, they will lose the dividend. There's enough kinks to make it work and I don't think he comes in at 24-26. If you do 30% premium of the last 30 days avg you get to ~21. I think he lowballs at 19.5, then comes in at 20.5-21. Thanks for bringing bby up again. I also added to AAP today, it's an interesting story, I'm thinking somewhere between 90-100, there is a lot a private equity buyer can do...1. company has two headquarters, 2. private label penetration is in the mid 20% whereas for AZO it's around 50%, 3. AP/Inventory ratio still lags, 4. There is no reason for this company to have $500MM cash, it's about $450MM too much. 5. Opportunity to do a lot of sale leasebacks. Perhaps he comes in with a $5 billion offer now? http://www.bloomberg.com/news/2012-11-16/schulze-said-to-still-be-exploring-buyout-offer-for-best-buy-1-.html Best Buy Co. (BBY) founder Richard Schulze is still exploring a buyout offer for the retailer and is likely to seek a 30-day extension to conduct due diligence, according to two people with knowledge of the matter. Potential private-equity investors have become more concerned about participating in a deal as Best Buy’s stock price drops, said the people, who asked not to be identified because the matter is private. Best Buy’s board may be more likely to back an offer from Schulze after recent earnings reports, another person said. Best Buy tumbled to its lowest price in a decade today after a Citigroup Inc. analyst said initiatives to turn around the company may not be enough to fend off online rivals. Schulze, Best Buy’s former chairman, offered to take the electronics retailer private at $24 to $26 a share in August. Link to comment Share on other sites More sharing options...
stahleyp Posted November 20, 2012 Share Posted November 20, 2012 Surprised no one is talking about this today. It looks like it's hitting a new 10 year low. under $12. Link to comment Share on other sites More sharing options...
Parsad Posted November 20, 2012 Share Posted November 20, 2012 Surprised no one is talking about this today. It looks like it's hitting a new 10 year low. under $12. I wasn't talking about it because I was busy buying more. Sheesh! ;D Cheers! Link to comment Share on other sites More sharing options...
ShahKhezri Posted November 20, 2012 Share Posted November 20, 2012 I blame me taking this position squarely on SP. Jk Almost 71% of their leases come for renewal in the next 5 years, they definitely have the opportunity to re-size their geography. There is decent value in a retailer that has optionality to reduce space, their mobile is doing really well. The investor day transcript is great, if you don't have it, PM me and I'll send it over. With that said, I respect a 25% trail stop with cool-off periods (usually 45-60 days to make sure I think clearly). I don't have brass one's and I don't let a trade turn into an investment by adding to it. Every rule is meant to be broken, but when I have broken that one, I end up making a 1% position into a 3% position that turns into a 1.5% position through losses. This is about 5% away from that level. Link to comment Share on other sites More sharing options...
Parsad Posted November 20, 2012 Share Posted November 20, 2012 By the way, Schulze or someone else needs to come in, because these guys are following the Lampert Kmart/Sears strategy at the moment...drip, drip, drip away shareholder value. This "Renew Blue" shit drives me crazy! You need to shut 15-20% of the stores down now! Sublease, sell or whatever you have to do. You need to cut G&A by $400M a quarter...simple! Painful, yes...but it has to be done. You can always reopen more stores as housing and consumer consumption increases, but there is a fundamental shift in the way people buy certain non-perishable goods now. Combine that with very defined consumption by a still wary consumer, and you have a business that needs to reexamine its complete footprint. Cheers! Link to comment Share on other sites More sharing options...
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