SHLDQ - Sears Holdings Corp

[Luke 532]

You're welcome!  Merkhet and others (forgive me as I can't remember other usernames off the top of my head) have also contributed a considerable amount. 

[stahleyp]

Yeah, props to Luke from my end, too. Thanks man!  :)

 

 

[Luke 532]

http://searsholdings.mediaroom.com/index.php?s=16310&item=137226

 

Sears Holdings Corporation Announces Intention To Obtain A $1.0 Billion Senior Secured Term Loan Facility

 

Sep 16, 2013

 

HOFFMAN ESTATES, Ill., Sept. 16, 2013 /PRNewswire/ -- Sears Holdings Corporation (NASDAQ: SHLD) today announced that it has provided notice to the administrative agent under the Company's existing Second Amended and Restated Credit Agreement, dated as of April 8, 2011 (the "Existing Credit Agreement"), that the Company intends to obtain a senior secured term loan facility of up to $1.0 billion (the "Incremental Term Loan").  If consummated, the Incremental Term Loan would be issued under the Existing Credit Agreement, which currently provides for a $3.275 billion asset-based revolving credit facility (the "Revolving Facility").  The Company intends to use the net proceeds of the Incremental Term Loan to reduce borrowings under the Revolving Facility.  The Incremental Term Loan is subject to obtaining lender commitments, as well as market and other conditions.

 

The Incremental Term Loan is expected to be secured by a first lien on the same collateral as the Revolving Facility, guaranteed by the same subsidiaries of the Company that guarantee the Revolving Facility, to have a maturity date of June 2018 and to include other terms customary for similar term loans.

[Luke 532]

I think it's a squeeze...remember this sucker jumped from $28 to $80 in a couple of months a couple of years ago.  And I thought the short position was even tighter this time around.  I would not be surprised to see it hit $70-75 again, and if you get some good news...watch out!  I'm not selling this one like the Overstock options...it's going to be my year-maker!  ;D  Cheers!

 

For what it's worth, the jump from $28-ish to $80-ish was a 185% squeeze.  The low last month was $38.  Similar squeeze, in terms of percentage gain, would result in a stock price of $108.  The difference is that this time around the short interest is a larger percentage of float.

[tombgrt]

If this isn't a squeeze, then I don't know what is. Sitting on a 5-bagger here so I sold a little. Also bought sept calls last week ($62.5 strike) well into the rally that are almost a 5-bagger as well but that was just 1.5% of my portfolio. This could just as fast go to $50 or lower again so dont count your eggs yet.

[Parsad]

If this isn't a squeeze, then I don't know what is. Sitting on a 5-bagger here so I sold a little. Also bought sept calls last week ($62.5 strike) well into the rally that are almost a 5-bagger as well but that was just 1.5% of my portfolio. This could just as fast go to $50 or lower again so dont count your eggs yet.

 

Nice job Tom!  Cheers!

[tombgrt]

Thanks Sanjeev. But honestly, I believe most comes down to luck once you got emotions under control.

 

Now a 25% position so sold some more today. All fairly short dated calls so want to at least get a decent profit locked in now. While maybe I shouldn't have, I also sold the rest of my ITM SD call position for an average 30% profit. Might buy it back later but don't want 50% of my portfolio in calls.  ???

[tombgrt]

Sanjeev, Luke, etc. what is your exit strategy?

 

I just put in a bunch of GTC orders for when the stocks rises further so I - in a way at least - get forced to sell at certain price points. That might mean I lose a few percentages return wise if the stock would spike up suddenly but at least it helps me to keep my emotions in check. If we ever reach $70 I want to have sold at least half but would also slow down selling when I only have say 10% left in case the stock goes much higher from there. How are you guys handling it?

[Luke 532]

Steven Roth of Vornado in his Chairman's Letter in 2004: "Sears was generally perceived as a slowly but surely declining retailer a la Two Guys and Alexander's, but we saw a collection of truly great (many irreplaceable) assets: 128 million square feet in 873 stores, of which over two-thirds are owned or ground leased in (I'm guessing) 70% of the best malls in America."

 

Just a thought, but I wouldn't be the least bit surprised if the stake Vornado is unwinding from JCP is used to buy SHLD.

[Luke 532]

Sanjeev, Luke, etc. what is your exit strategy?

 

I just put in a bunch of GTC orders for when the stocks rises further so I - in a way at least - get forced to sell at certain price points. That might mean I lose a few percentages return wise if the stock would spike up suddenly but at least it helps me to keep my emotions in check. If we ever reach $70 I want to have sold at least half but would also slow down selling when I only have say 10% left in case the stock goes much higher from there. How are you guys handling it?

 

If I have a spread trade on I usually take profits at 70% of the maximum profit of the trade.  Not 70% gain on amount invested, but 70% of the max possible gain.  This isn't set in stone but it's a barometer I use that has helped.

 

For example, I'm approaching that 70% threshold with a bull call spread I bought in AIG awhile back that doesn't expire until 2015.  If I can get 70% in the next month or two I will definitely take it as I don't think gaining the final 30% while hoping for no market freefall in the next 12 months would be worth it.

[Parsad]

Sanjeev, Luke, etc. what is your exit strategy?

 

I just put in a bunch of GTC orders for when the stocks rises further so I - in a way at least - get forced to sell at certain price points. That might mean I lose a few percentages return wise if the stock would spike up suddenly but at least it helps me to keep my emotions in check. If we ever reach $70 I want to have sold at least half but would also slow down selling when I only have say 10% left in case the stock goes much higher from there. How are you guys handling it?

 

If you have the investment in a non-taxable account, and don't plan on exercising any of the options, I would just sell as it rises.  One of the simplest and most effective investment tools is just simply averaging out of a position.  It takes all of the emotion and guesswork out of the sell-side. 

 

We have it all in our funds, so there are flow through taxes to our taxable partners.  I may also keep some of the shares after exercising the LEAPs, so I've just bought January 2014 puts as the price rises on a fraction of the investment each time, locking in the gains at certain hurdles and putting off the profits till next year.  The position is now almost as big as our BAC and LUK position...10% of the fund...and we think there is room to run.  I think it can get to $80 in the next few weeks. 

 

We're having one hell of a year for a fund that is 45% in cash!  Our partners will be happy, and I'm quite happy to receive my incentive fees!  ;D  Cheers! 

[tombgrt]

Congratz to you Sanjeev. 45% in cash and still a good return is amazing.

 

I agree with your viewpoint on selling the options. I'm not taxed so I can just sell them along the way, which is great. I just sell my shorter duration calls and more ITM calls faster than the rest. There is no way of knowing where the fun will end although I do believe there is a good chance we'll get quite a bit higher from here considering what we know. Btw, good thing I bought those OTM sept calls with my sold SD calls or I wouldn't be to happy right now! :D

 

[CorpRaider]

Haha, yeah I thought about you when I saw the SD action today, good form!  I'm thinking of letting go of some of my SD LEAPS, I'm up about 55% in them, I might sell half and let the rest run.

[muscleman]

Luke, I think the short squeeze is likely over for the short term. I see 100,000 shares available for borrowing today, and yesterday the total daily volume was over 2M shares, but the share price didn't go up by much, which I assume some longs are unloading. :)

Anyway, this is a value investing board, so I am hesitant to post too much about this staff.

[Luke 532]

Luke, I think the short squeeze is likely over for the short term. I see 100,000 shares available for borrowing today, and yesterday the total daily volume was over 2M shares, but the share price didn't go up by much, which I assume some longs are unloading. :)

Anyway, this is a value investing board, so I am hesitant to post too much about this staff.

 

You could be right.  After all, it's anybody's guess what will happen short-term.

[BTShine]

http://searsholdings.mediaroom.com/index.php?s=16310&item=137226

 

Sears Holdings Corporation Announces Intention To Obtain A $1.0 Billion Senior Secured Term Loan Facility

 

Sep 16, 2013

 

HOFFMAN ESTATES, Ill., Sept. 16, 2013 /PRNewswire/ -- Sears Holdings Corporation (NASDAQ: SHLD) today announced that it has provided notice to the administrative agent under the Company's existing Second Amended and Restated Credit Agreement, dated as of April 8, 2011 (the "Existing Credit Agreement"), that the Company intends to obtain a senior secured term loan facility of up to $1.0 billion (the "Incremental Term Loan").  If consummated, the Incremental Term Loan would be issued under the Existing Credit Agreement, which currently provides for a $3.275 billion asset-based revolving credit facility (the "Revolving Facility").  The Company intends to use the net proceeds of the Incremental Term Loan to reduce borrowings under the Revolving Facility.  The Incremental Term Loan is subject to obtaining lender commitments, as well as market and other conditions.

 

The Incremental Term Loan is expected to be secured by a first lien on the same collateral as the Revolving Facility, guaranteed by the same subsidiaries of the Company that guarantee the Revolving Facility, to have a maturity date of June 2018 and to include other terms customary for similar term loans.

 

Once this term loan is completed, Lampert will pay back the revolver, but I believe the revolver will still exist in full and Sears will have access to all of the $3.3 Billion (plus $1B term loan).  Based upon how Lampert has handled AN and AZO, Sears will use the additional borrowing capacity for huge share buybacks once he sees the financials improving internally (before they're announced in an earnings release).  He did this with AN in 2010, and it added significant value to the shares.   

 

I think there's a chance he'll use the SYWR information and relationships with members to pull a lever at some point, which makes SHLD profitable again.  If not, we still have the inventory, real estate and brand value to realize if financials deteriorate. 

[krazeenyc]

http://searsholdings.mediaroom.com/index.php?s=16310&item=137226

 

Sears Holdings Corporation Announces Intention To Obtain A $1.0 Billion Senior Secured Term Loan Facility

 

Sep 16, 2013

 

HOFFMAN ESTATES, Ill., Sept. 16, 2013 /PRNewswire/ -- Sears Holdings Corporation (NASDAQ: SHLD) today announced that it has provided notice to the administrative agent under the Company's existing Second Amended and Restated Credit Agreement, dated as of April 8, 2011 (the "Existing Credit Agreement"), that the Company intends to obtain a senior secured term loan facility of up to $1.0 billion (the "Incremental Term Loan").  If consummated, the Incremental Term Loan would be issued under the Existing Credit Agreement, which currently provides for a $3.275 billion asset-based revolving credit facility (the "Revolving Facility").  The Company intends to use the net proceeds of the Incremental Term Loan to reduce borrowings under the Revolving Facility.  The Incremental Term Loan is subject to obtaining lender commitments, as well as market and other conditions.

 

The Incremental Term Loan is expected to be secured by a first lien on the same collateral as the Revolving Facility, guaranteed by the same subsidiaries of the Company that guarantee the Revolving Facility, to have a maturity date of June 2018 and to include other terms customary for similar term loans.

 

Once this term loan is completed, Lampert will pay back the revolver, but I believe the revolver will still exist in full and Sears will have access to all of the $3.3 Billion (plus $1B term loan).  Based upon how Lampert has handled AN and AZO, Sears will use the additional borrowing capacity for huge share buybacks once he sees the financials improving internally (before they're announced in an earnings release).  He did this with AN in 2010, and it added significant value to the shares.   

 

I think there's a chance he'll use the SYWR information and relationships with members to pull a lever at some point, which makes SHLD profitable again.  If not, we still have the inventory, real estate and brand value to realize if financials deteriorate.

 

I don't think large share buybacks are likely.  (who's shares is he going to buy back? Unless they're his -- they're not that many shares to be bought back.  I think more likely redevelopment of real estate is expensive!

 

 

[Guest wellmont]

with some sears debt trading at 60% of par, which is distressed, bondholders would not appreciate a share buyback at shld. bond investors say finances are still shaky and the balance sheet is terrible. when and if the bonds recover, you can then start thinking about rewarding the shareholders by allocating capital to repurchases.

[ScottHall]

with some sears debt trading at 60% of par, which is distressed, bondholders would not appreciate a share buyback at shld. bond investors say finances are still shaky and the balance sheet is terrible. when and if the bonds recover, you can then start thinking about rewarding the shareholders by allocating capital to repurchases.

 

Only the SRAC debt is at 60 AFAIK. That's quite a bit different from the Holdings debt for several reasons.

[Guest wellmont]

it's not a sign of strength that he has bonds trading at 60. until he remedies that one way or the other, there isn't going to be repurchases imo.

[alertmeipp]

anyone why they want to pay up more interest to have this term loan vs. revolver?

[thepupil]

i think they are doing the term loan to extend maturity. Otherwise your guess is as good as mine.

 

Sears Holdings Corp (NASDAQ:SHLD) said the loan will mature in June 2018, and will be secured by the same collateral as its existing credit facility. Revolving credit facility is a type of loan where the amount repaid can be borrowed again in the future. The existing revolving credit line of $3.275 billion will mature in April 2016

 

if the SRAC bonds are trading for 60 and Eddie still has lots of liquidity via revolver/asset monetizations/etc. Why not make a tender offer to buy back the bonds? any precedent for this?

[BTShine]

i think they are doing the term loan to extend maturity. Otherwise your guess is as good as mine.

 

Sears Holdings Corp (NASDAQ:SHLD) said the loan will mature in June 2018, and will be secured by the same collateral as its existing credit facility. Revolving credit facility is a type of loan where the amount repaid can be borrowed again in the future. The existing revolving credit line of $3.275 billion will mature in April 2016

 

if the SRAC bonds are trading for 60 and Eddie still has lots of liquidity via revolver/asset monetizations/etc. Why not make a tender offer to buy back the bonds? any precedent for this?

 

They can repurchase the bonds in the open market, too.  It will trigger gains, and possibly taxes associated with the gains (might be offset by NOLs), but would be worth it in my opinion. 

[Luke 532]

http://www.mediapost.com/publications/article/209557/why-sears-e-commerce-is-ramping-up-user-generated.html#axzz2fijmKUBk

Why Sears E-Commerce Is Ramping Up User-Generated Video Reviews

 

“Wait -- how many user-generated videos does Sears have on its e-commerce site?” I asked, nearly falling off a stationary ATV in the mountains near Lake Tahoe. “33,000,” replied John Courtney, whose unusual title (Certified Agile Project Manager and Marketing Professional at Sears Holdings E-Commerce Content Strategy) indicates a preference for prolific innovation.

 

And sure enough, after resuming our conversation on terra firma, I was pretty much blown away that Sears already had tens of thousands of user-generated video reviews that were having a material impact on Web sales. Although Courtney would not reveal Sears’ future plans, it is easy to imagine that there could be millions of these videos in the not-too-distant future, and here are five reasons why.

 

1. They drive sales

 

Working with a company called ExpoTV, Sears has enlisted an army of reviewers that they call “brand-connected consumers.” This elite group’s video reviews are directly matched to approximately 12,500 relevant items on product pages. “So far, product pages with consumer-generated videos appear to outperform those without,” Courtney says of these reviews’ impact.

 

2. They’re much cheaper than pro videos

 

Another reason to solicit user-generated videos? “You can get hundreds of them for around the same cost of a handful of professionally produced videos,” explains Courtney. Of course, with cheap comes spotty quality, which means all user-generated videos need to be screened. ExpoTV takes care of this for Sears, clearing out any “lascivious [content] or improper use of product.”

 

3. They add credibility

 

It is a known fact in the world of e-commerce that sites with both good and bad customer reviews have higher sales than those that have no reviews or just positive ones. The same applies to video reviews. “It’s important that all consumer-generated product review videos -- whether good or bad -- are available so it’s authentic,” notes Courtney. Turns out honesty is a damn good policy.

 

4. They enhance product perceptions

 

They say that perception is reality, and that certainly applies in this case. Among the more surprising results Courtney shared is that posting videos on product pages generates its own interest and drives sales even when people don’t watch the videos. In essence, these user-generated reviews function as a “seal of approval” simply by being there.

 

5. They’re a surprisingly good source of customer feedback

 

Perhaps more than other types of user-generated content, videos create a unique listening opportunity for brands, since reviewers often put their heart and soul into their efforts. “The more you listen and heed users’ comments to strengthen your brand, the more valuable the conversation will become,” Courtney advises.

 

Final note: John and I met at the highly informative MediaPost Social Media Insider Summit back in August, during which he cleared up any doubts I had about the potential and scalability of UGC. To see our extensive conversation on Sears’ burgeoning video review program, be sure to visit The Drew Blog.

 

[Luke 532]

Eddie has over $1B in his coffers that he freed up last quarter with the full liquidation of Capital One, Genworth, IStar, and Orchard, and the partial liquidations of AutoNation (liquidated 36% of his stake), GAP (26%), and SHOS (36%).

 

Excluding SHLD, Lampert sold 44% of all shares that ESL owned in other companies... in one quarter.

Shares Q1: 64,747,254

Shares Q2: 36,418,437

Change: 44% drop

 

The $1B does not include any redemptions that he might need to meet (I'm not well-versed on ESL's lock-up period and when investors can get out; I believe it's 5 years but I don't know if it's rolling or not).

 

Guess who has been selling AutoNation the past few days to the tune of 1.8M shares?

 

http://www.sec.gov/Archives/edgar/data/350698/000118143113048322/xslF345X03/rrd390071.xml

 

Another 748,000 shares of AN sold last Monday (Sept 16th).  Where oh where will Lampert invest this cash  ;)  (yes, I know, some will likely be for redemptions)

http://www.sec.gov/Archives/edgar/data/350698/000118143113049752/xslF345X03/rrd390744.xml

 

AN is ESL's largest holding (outside of SHLD, of course). 

31.44M shares (end of Q1) 

20.27M shares (end of Q2) 

17.64M shares (as of last Monday after sales on 9/10 and 9/16).

 

44% reduction in AN shares (31.44M down to 17.64M).