plato1976 Posted January 10, 2014 Share Posted January 10, 2014 If quick store closing is cash flow positive and also releases real estate for other purposes ... in reality I think most store closing has other costs so that a quick liquidation is not viable - shld close stores - convert inventory to cash at a gaap loss - less store, need less inventory for next cycle - while at the same time re-purpose/sale/give back the free up real estate - repeat until the remaining store can achieve gaap profit (if ever) this about sums it up for me what shld is doing? Link to comment Share on other sites More sharing options...
alertmeipp Posted January 10, 2014 Author Share Posted January 10, 2014 7 millions trade so far, anyone of you sell some? i actually added a bit. Link to comment Share on other sites More sharing options...
opihiman2 Posted January 10, 2014 Share Posted January 10, 2014 I haven't followed the turnaround retailers in years. I remember the board being way into SHLD and LVLT from like 5 to 6 years ago. It's interesting to come back after so long to see how the thesis has played out. Basically, LVLT went nowhere, not surprising, and SHLD seems to be heading the way of the dodo bird--kinda surprising. And, to echo some sentiments I've read, I also remember SHLD being pitched as a jockey stock with a value asset play. But, I've always steered clear of the old school retailers. It seems that a lot of them have gone bankrupt in recent years. And, I really can't see SHLD bouncing back unless the macro picture improves so much that we're back to the heady days of the 90's. How are they going to prevent the bleed to Internet shopping? Only things like clothes, where B&M has the edge over Internet shopping, can help it prevail. Anyways, good luck folks. I'll be starting to follow the Sears story again. If the price drops even further, I may have to buy some. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 10, 2014 Share Posted January 10, 2014 I'm a bit curious about the situation on Tuesday when short selling comes back. On the other had, the price is holding up remarkably well today with 7+ million shares being dumped. I don't see how the short sellers are going to top that. Plus, if you are still long on Tuesday at the open you have some grit indeed -- so perhaps the longs will be done selling by then. Link to comment Share on other sites More sharing options...
BTShine Posted January 10, 2014 Share Posted January 10, 2014 I'm a bit curious about the situation on Tuesday when short selling comes back. On the other had, the price is holding up remarkably well today with 7+ million shares being dumped. I don't see how the short sellers are going to top that. Plus, if you are still long on Tuesday at the open you have some grit indeed -- so perhaps the longs will be done selling by then. Over time it all comes down to the value created, or released, by the company. Predicting the short term swings of the market, or any company, are a task no one has mastered. Link to comment Share on other sites More sharing options...
peridotcapital Posted January 10, 2014 Share Posted January 10, 2014 If quick store closing is cash flow positive and also releases real estate for other purposes ... in reality I think most store closing has other costs so that a quick liquidation is not viable - shld close stores - convert inventory to cash at a gaap loss - less store, need less inventory for next cycle - while at the same time re-purpose/sale/give back the free up real estate - repeat until the remaining store can achieve gaap profit (if ever) this about sums it up for me what shld is doing? I would think about store closings this way: Inventory per store is about $4.0M (at cost). Payables per store are about $2.0M. Severance is likely pretty low, call it $100K-$200K. Let's assume when SHLD goes into full clearance mode they get $3.2M for the inventory (their realized mark-up is normally 33%, so assume they discount everything an additional 40% in the liquidation sale, thus they take a 20% loss on each item). So for the average store they decide to close by not renewing the lease, they might generate cash of about $1 million despite a GAAP loss. For the first 9 months of 2013 they closed 55 stores, so call it $50M of net proceeds. The point is, even if they ramp up store closings to 100-200 a year, which it seems like they might be doing now, it's not going to be a significant cash generator for a company this size. Especially considering that for 2013 it looks to me like their negative operating FCF is going to be about $600,000 per open store. Link to comment Share on other sites More sharing options...
Parsad Posted January 10, 2014 Share Posted January 10, 2014 Maybe it's my wishful thinking, but I don't think he'll stop sharing a good amount of his thoughts. He loves us after all! ;) Yes Paul, you are correct! Out of all of the stocks available, I will probably refrain from commenting on ten of them at any given time. That is not the end of the world. Cheers! Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted January 10, 2014 Share Posted January 10, 2014 I added my first (substantial) position today,watched this name for a few years - never really dig into until the last couple of months. Cost basis a bit under 38 at close to 10% weighting... On a side note, What is a jockey stock? Link to comment Share on other sites More sharing options...
alertmeipp Posted January 10, 2014 Author Share Posted January 10, 2014 most who hate the retail side will sell out, those left behind will probably be die hard asset play fan... who would have hold if not. Link to comment Share on other sites More sharing options...
finetrader Posted January 10, 2014 Share Posted January 10, 2014 If Eddie buys some SHLD for himself or for ESL I might consider jumping in. That would be a great way to proceed: Give SHLD stocks to investors that want out from ESL. Let them sell the stock in the market and lets decrease the stock price by the same time. Then, after a bad q4 quarter with even more sell-off, buy the stock at lower price with the money left in ESL fund or in his own pocket If he does not then I think it is a signal that he too does not know where this company is going.. Link to comment Share on other sites More sharing options...
kirkomi Posted January 10, 2014 Share Posted January 10, 2014 On a side note, What is a jockey stock? The company is the horse and the CEO/Management is the jockey. If the management has a fine track record, and one invests based on the quality of the management then the stock is called a "jockey stock". Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 10, 2014 Share Posted January 10, 2014 Does that short selling rule even have any teeth? I'm sure if I buy a put the professional options trader is shorting the stock to hedge. So if I write calls and use proceeds to buy puts, aren't I in effect shorting the stock? Even though shorting is banned? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 10, 2014 Share Posted January 10, 2014 On a side note, What is a jockey stock? The company is the horse and the CEO/Management is the jockey. If the management has a fine track record, and one invests based on the quality of the management then the stock is called a "jockey stock". You can put a jockey on a bull, and he's not called a "jockey" anymore. Link to comment Share on other sites More sharing options...
pocoapoco Posted January 10, 2014 Share Posted January 10, 2014 Does that short selling rule even have any teeth? I'm sure if I buy a put the professional options trader is shorting the stock to hedge. So if I write calls and use proceeds to buy puts, aren't I in effect shorting the stock? Even though shorting is banned? You are right - the options pro has an exemption to sell short. The shorting restriction is just a circuit breaker but as you point out doesn't prevent one from having short exposure through options. Link to comment Share on other sites More sharing options...
krazeenyc Posted January 10, 2014 Share Posted January 10, 2014 I'm a bit curious about the situation on Tuesday when short selling comes back. On the other had, the price is holding up remarkably well today with 7+ million shares being dumped. I don't see how the short sellers are going to top that. Plus, if you are still long on Tuesday at the open you have some grit indeed -- so perhaps the longs will be done selling by then. Over time it all comes down to the value created, or released, by the company. Predicting the short term swings of the market, or any company, are a task no one has mastered. SAC was very good at this :D Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted January 10, 2014 Share Posted January 10, 2014 Does that short selling rule even have any teeth? I'm sure if I buy a put the professional options trader is shorting the stock to hedge. So if I write calls and use proceeds to buy puts, aren't I in effect shorting the stock? Even though shorting is banned? Eh that's a really good question- you can short it synthetically, I imagine that depresses call premiums/exerts upward pressure on puts... Link to comment Share on other sites More sharing options...
wisdom Posted January 10, 2014 Share Posted January 10, 2014 With $1B in cash and another $300 mil coming today - hoping that he does some buybacks. It would be nice to bring down the share count to 100 mil. Link to comment Share on other sites More sharing options...
blainehodder Posted January 10, 2014 Share Posted January 10, 2014 Im tempted to buy some short term puts here. I think this will melt (P.E.A.D.) over the next few weeks as longs get scared out of the asset thesis, and shorts enter really hard for the short term. Especially given short interest is lower than the last time around. Plenty of pessimists left to enter on the short side, asretail hopes are clearly worse than last time at these same levels. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted January 10, 2014 Share Posted January 10, 2014 On a side note, What is a jockey stock? The company is the horse and the CEO/Management is the jockey. If the management has a fine track record, and one invests based on the quality of the management then the stock is called a "jockey stock". You can put a jockey on a bull, and he's not called a "jockey" anymore. El matador? What do you call someone riding a bear? Link to comment Share on other sites More sharing options...
rkbabang Posted January 10, 2014 Share Posted January 10, 2014 On a side note, What is a jockey stock? The company is the horse and the CEO/Management is the jockey. If the management has a fine track record, and one invests based on the quality of the management then the stock is called a "jockey stock". You can put a jockey on a bull, and he's not called a "jockey" anymore. El matador? What do you call someone riding a bear? A mutilated corpse. Link to comment Share on other sites More sharing options...
adesigar Posted January 10, 2014 Share Posted January 10, 2014 On a side note, What is a jockey stock? The company is the horse and the CEO/Management is the jockey. If the management has a fine track record, and one invests based on the quality of the management then the stock is called a "jockey stock". You can put a jockey on a bull, and he's not called a "jockey" anymore. El matador? What do you call someone riding a bear? A Sears Holdings Shareholder ? Link to comment Share on other sites More sharing options...
enoch01 Posted January 10, 2014 Share Posted January 10, 2014 Im tempted to buy some short term puts here. I think this will melt (P.E.A.D.) over the next few weeks as longs get scared out of the asset thesis, and shorts enter really hard for the short term. Especially given short interest is lower than the last time around. Plenty of pessimists left to enter on the short side, asretail hopes are clearly worse than last time at these same levels. I was tempted to do the opposite and sell some short term puts. The assets are there, and he is converting to cash as necessary. He is shrinking the retail. The stock has made a new 52 week low and is already heavily shorted. I doubled my position today buying calls. Link to comment Share on other sites More sharing options...
blainehodder Posted January 10, 2014 Share Posted January 10, 2014 Im tempted to buy some short term puts here. I think this will melt (P.E.A.D.) over the next few weeks as longs get scared out of the asset thesis, and shorts enter really hard for the short term. Especially given short interest is lower than the last time around. Plenty of pessimists left to enter on the short side, asretail hopes are clearly worse than last time at these same levels. I was tempted to do the opposite and sell some short term puts. The assets are there, and he is converting to cash as necessary. He is shrinking the retail. The stock has made a new 52 week low and is already heavily shorted. I doubled my position today buying calls. Fair enough. I feel as though Lampert's net worth and/or a Lands End spin might provide some sort of squishy floor in the low 20's (which offer a fairly attractive annualized put yield!). I'm thinking more short term. Given more shorts should enter, I think longing the 52 week low here is risky. Buying 52 week lows tend to not be a very well performing strategy, particularly after a surprise to the downside of this magnitude. If you want to get sythetically long, why not wait, or perhaps sell the longer term Jan 15 25er puts in hopes of the Lands End spin or a Lampert/Berkowitz floor? I agree the yield is attractive on the short term puts, but I'd steer clear personally. I see this melting off another 10% (sub 33) in under 1 month. Of course everything in that short of a time frame is purely speculative. I guess that's what makes a market! Good luck! Link to comment Share on other sites More sharing options...
wisdom Posted January 10, 2014 Share Posted January 10, 2014 Moody downgrade https://www.moodys.com/research/Moodys-downgrades-Sears-Holdings-Corporate-Family-Rating-to-Caa1--PR_290451?WT.mc_id=NLTITLE_YYYYMMDD_PR_290451 Link to comment Share on other sites More sharing options...
peridotcapital Posted January 10, 2014 Share Posted January 10, 2014 Moody downgrade https://www.moodys.com/research/Moodys-downgrades-Sears-Holdings-Corporate-Family-Rating-to-Caa1--PR_290451?WT.mc_id=NLTITLE_YYYYMMDD_PR_290451 Moody's expects full year cash burn (after capital spending, interest and pension funding) to be around $1.2 billion in 2013 and we expect Sears' cash burn to remain well above $1 billion in 2014. That is the problem, there is no end in sight to the cash burn and its continual destruction of equity value. Link to comment Share on other sites More sharing options...
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