thepupil Posted March 20, 2014 Share Posted March 20, 2014 Thepupile, adesigar, do you see your total cash balance goes up a lot after you exchange SHLD with SHLDV? My SHLDV purchase used cash. I'm using interactive brokers margin account, it just deducts and adds cash immediately even if the trades have et to settle, at least that is how it is displayed. I want to thank gardenstatevalue again for putting up the critical Nasdaq link. Whether lands end is worth 20 or 30 or 40, that link was super helpful. With 2 lifetime posts the value per post of gardenstatevalue is very high! Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 20, 2014 Share Posted March 20, 2014 are shld and shldv "substantially the same" security? :-[ Link to comment Share on other sites More sharing options...
jeffmori7 Posted March 20, 2014 Share Posted March 20, 2014 Thanks for all the answers guys. Link to comment Share on other sites More sharing options...
hyten1 Posted March 20, 2014 Share Posted March 20, 2014 or can't you guys just short LEDMV for those who own shld but don't want to own LE and don't want to take the tax hit now? you can delay the short term tax hit (assuming you have a short term tax hit)? Link to comment Share on other sites More sharing options...
alertmeipp Posted March 20, 2014 Author Share Posted March 20, 2014 Not sure why but people seems to like LEDMV @ 33. Over 500k volume so far. I feel like I am betting against myself as I want LEDMV to go down (SHLDV to go up) but I still have some SHLD. Didn't expect LAND to trade above 30. Maybe shorts want it? Link to comment Share on other sites More sharing options...
alertmeipp Posted March 20, 2014 Author Share Posted March 20, 2014 or can't you guys just short LEDMV for those who own shld but don't want to own LE and don't want to take the tax hit now? you can delay the short term tax hit (assuming you have a short term tax hit)? Good luck getting the borrows. I checked IB this morning, can't short btw. Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 20, 2014 Share Posted March 20, 2014 or can't you guys just short LEDMV for those who own shld but don't want to own LE and don't want to take the tax hit now? you can delay the short term tax hit (assuming you have a short term tax hit)? tda would not let me. said it was not marginable... Link to comment Share on other sites More sharing options...
alertmeipp Posted March 20, 2014 Author Share Posted March 20, 2014 It's nice to go through this spinoff, I learned something. Next for me will be CHK and ECA. Link to comment Share on other sites More sharing options...
heth247 Posted March 20, 2014 Share Posted March 20, 2014 One thing I don't understand is who are the sellers of SHLDV and LEDMV? Where do they get their shares for sale? According to the nasdaq link provided by gardenstatevalue, it seems that Nasdaq is still seeking for market makers for the two tickers. Link to comment Share on other sites More sharing options...
krazeenyc Posted March 20, 2014 Share Posted March 20, 2014 I am pretty bullish on Lands End. I pretty much said if it traded at Peridot's valuation 700-800M EV I'd be buying it aggressively (even in addition to the many shares I would've owned through the SHLD spinoff). I expected that it would easily fetch $1.2B + EV from a VF Corp or some other company interested in retail. Lands End is a classic brand that is not impacted much by current short term fashion trends, it has likely been mismanaged (underinvested in), and it has a very loyal following. (Even if young value investors don't buy their clothes or think a brand like Eddie Bauer is more valuable) Lands End barely has a bricks and mortar footprint and under the right management focused on the success of the brand it could do very very well. That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. Link to comment Share on other sites More sharing options...
adesigar Posted March 20, 2014 Share Posted March 20, 2014 I'm not sure to get any of this...I should receive LE shares and therefore, my SHLD will robably go down the value of the LE spinoff, right? Why are you doing all these transactions and what are your ***V ticker representing? I don't see any Land'End share in my broker account? Exactly....why are you all doing this trading? Don't like to own LE shares? Because the current SHLDV price is implying a 1.5B EV of LE, pretty high based on its current earning. If SHLDV is mispriced (due to people forgot to factor in the $500MM received from LE), its value may go higher than $38.50 after spinoff. Exactly my viewpoint at $33 it has a market cap for 1 Billion+ with 500 Million paid to SHLD. That's 1.5 Billion EV or about $14-$15 per share. That's higher than even the most optimistic valuations mentioned in this thread that I can remember (I was thinking $8-$12 per share). Link to comment Share on other sites More sharing options...
alertmeipp Posted March 20, 2014 Author Share Posted March 20, 2014 SHLDV-2 will probably trade -ve when they spin off Auto and KCD. :D Link to comment Share on other sites More sharing options...
heth247 Posted March 20, 2014 Share Posted March 20, 2014 I am pretty bullish on Lands End. I pretty much said if it traded at Peridot's valuation 700-800M EV I'd be buying it aggressively (even in addition to the many shares I would've owned through the SHLD spinoff). I expected that it would easily fetch $1.2B + EV from a VF Corp or some other company interested in retail. Lands End is a classic brand that is not impacted much by current short term fashion trends, it has likely been mismanaged (underinvested in), and it has a very loyal following. (Even if young value investors don't buy their clothes or think a brand like Eddie Bauer is more valuable) Lands End barely has a bricks and mortar footprint and under the right management focused on the success of the brand it could do very very well. That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. Yes, today's misprice of SHLDV/LEDMV is too large to ignore. It may amount to $5+ of SHLD share price. Link to comment Share on other sites More sharing options...
peridotcapital Posted March 20, 2014 Share Posted March 20, 2014 I am pretty bullish on Lands End. I pretty much said if it traded at Peridot's valuation 700-800M EV I'd be buying it aggressively (even in addition to the many shares I would've owned through the SHLD spinoff). I expected that it would easily fetch $1.2B + EV from a VF Corp or some other company interested in retail. Lands End is a classic brand that is not impacted much by current short term fashion trends, it has likely been mismanaged (underinvested in), and it has a very loyal following. (Even if young value investors don't buy their clothes or think a brand like Eddie Bauer is more valuable) Lands End barely has a bricks and mortar footprint and under the right management focused on the success of the brand it could do very very well. That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. I'm shocked at the $1.5B E/V and will be surprised if it stays there in the intermediate term. The idea that LE should trade at a large premium to the price JCrew sold for, and above practically every other apparel retailer out there makes no sense to me. I can buy EXPR or ANN (two of my favorite apparel stocks right now) at 4-5x cash flow, most of the peers fetch 6x, but LE trades at 10x? It's baffling (and will make for a nice paired trade potentially if it trades over 30 regular way). Link to comment Share on other sites More sharing options...
thepupil Posted March 20, 2014 Share Posted March 20, 2014 What's funny to me is all the obscenely low price targets for SHLD equity that have been thrown out there. I recall $8/share or $16/share valuations being put out regularly. With this spin, those price targets will only be true if SHLD without Lands End falls to $0 in the near future. We know Sears Canada is trading for $2B CAD, making SHLD's interest worth $900MM. We also know that Sears Holdings owns the $800MM of bonds backed by the 125 REMIC LLC stores free and clear of any insurance liabilities now. So that's $1.7B of securities at the holdco with which Eddie can do something. It would be a bit of a stretch but one could argue that Sears Holdings has no net debt ( Sears Canada + REMIC LLC Bonds > $1.25B 2018 Notes). Of course Sears Retail is loaded to the gills with lease liabilities, revolvers, SRACs, pension, severance costs, etc. More Subleases, Less Shop Your Way Points! Uses for REMIC LLC and Sears Canada: spin to shareholders, fund pension, have slowly waste away as operations burn cash, give to Eddie for chanukah, the possibilities are endless Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 20, 2014 Share Posted March 20, 2014 this is a great result for shld shareholders. probably will encourage esl to pursue more spin offs. le certainly was not being recognized in the shld structure. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 20, 2014 Share Posted March 20, 2014 are shld and shldv "substantially the same" security? :-[ I'm sure it'll be hard to explain to the IRS how they're not. If call options or warrants are the substantially similar, then I would think a pre and post spinoff of the same stock would be substantially similar. Not sure why but people seems to like LEDMV @ 33. Over 500k volume so far. I feel like I am betting against myself as I want LEDMV to go down (SHLDV to go up) but I still have some SHLD. Didn't expect LAND to trade above 30. Maybe shorts want it? I'm pretty shorts are the reason. Shorts are betting against Sears - LE is at least profitable and probably not central to their thesis. If anything, they'll argue the loss or profitability to the parent makes Sears a more attractive short. LE would likely have the same to similar float/short interest metrics as SHLD. Some longs will sell, some longs will hold easing that tension, but the majority of shorts will be buyers because LE isn't central to their short thesis. What you're seeing is a miniature short squeeze as shorts scramble to buy LE. Fortunately for us, the short squeeze affects the value of SHLDV downwards (by pushing the price of LE upwards) because of the arbitrage rule that says the sum of them should equal the price of SHLD. Trading out of LE and into SHLDV seems pretty smart and obvious. Unfortunately for those of us in options, or taxable accounts, that may not be an available option at the moment. Link to comment Share on other sites More sharing options...
Mephistopheles Posted March 21, 2014 Share Posted March 21, 2014 I know someone asked this before, and I'm also a bit drunk. But who is selling the "v" shares? Rather, where is the supply of those shares coming from? Link to comment Share on other sites More sharing options...
MrB Posted March 21, 2014 Share Posted March 21, 2014 Option adjustment http://www.theocc.com/webapps/infomemos?number=34314&data-ipsquote-timestamp=201403&lastModifiedDate=03%2f20%2f2014+15%3a42%3a46 Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 21, 2014 Share Posted March 21, 2014 are shld and shldv "substantially the same" security? :-[ I'm sure it'll be hard to explain to the IRS how they're not. If call options or warrants are the substantially similar, then I would think a pre and post spinoff of the same stock would be substantially similar. thanks for your input. I am not as sure. LE represents 18% of the market cap of shld when the trade was made. I sold shld with LE attached, and bought it without. how is that substantially the same security? I am paying $10 a share less for shld when issued than shld. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 21, 2014 Share Posted March 21, 2014 That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. Just trying to confirm something... given a Record Date of March 24th and Distribution Date of April 4th, to take advantage of the trade quoted above (selling SHLD and buying SHLDV) that trade would have to take place prior to the Record Date of 5:30pm on March 24th, correct? Link to comment Share on other sites More sharing options...
krazeenyc Posted March 21, 2014 Share Posted March 21, 2014 That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. Just trying to confirm something... given a Record Date of March 24th and Distribution Date of April 4th, to take advantage of the trade quoted above (selling SHLD and buying SHLDV) that trade would have to take place prior to the Record Date of 5:30pm on March 24th, correct? No. Link to comment Share on other sites More sharing options...
adesigar Posted March 21, 2014 Share Posted March 21, 2014 That being said I sold SHLD aggressively to buy SHLDV today. At a $1.5B EV it's not the no brainer that it would've been at $700-800M EV. Just trying to confirm something... given a Record Date of March 24th and Distribution Date of April 4th, to take advantage of the trade quoted above (selling SHLD and buying SHLDV) that trade would have to take place prior to the Record Date of 5:30pm on March 24th, correct? No. I might be completely wrong about this but from the way I understand it I believe Luke 5:32 is correct. Here is how I understand it. Till 24th SHLD is SHLDV+LEDMV so to extract value of Lands End one would have to sell SHLD and buy SHLDV After 24th March till 4th April we wont have SHLD but we will have SHLDV and LEDMV so can sell LEDMV and keep SHLDV After 4th we will have SHLD and LE so sell LE and keep SHLD Link to comment Share on other sites More sharing options...
krazeenyc Posted March 21, 2014 Share Posted March 21, 2014 SHLD will continue trading "the regular way" (ie with LE rights attached), and LEMDV and SHLDV will continue trading until 4/4. ON that date only SHLD and LE will trade. I've been involved with a handful of spinoffs that have had this kind of language -- it has always been this way. Link to comment Share on other sites More sharing options...
TeddyLampert Posted March 21, 2014 Share Posted March 21, 2014 Has anyone come across a filing that explains how Edgar Huber and the top management team will be compensated via stock ownership in LE? The Genius book says that understanding how management is incentivized is one of the most important considerations in a spin-off. I generally find this very hard to dig out because it's not in in the initial 10-12b filing (usually generic language is used to describe how there's going to be a long term incentive plan, etc etc). In a few cases I've seen the info buried in some other documents made public through an 8-K. Anyone able to help with this? Thanks. Link to comment Share on other sites More sharing options...
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