Picasso Posted October 30, 2014 Share Posted October 30, 2014 No, i don't think you're looking at it the right way. The bonds will trade at a discount of maybe $85 dollars. Since the rights are based on a 100% bond allocation that is worth about $468. Plus the warrants will be worth whatever a 5 year call at $28.4 based on a $32.5 stock price (or something around there based on SHLD trading today). I priced that around $12 dollars x 17.6 = $211. So sum of the two comes out to $680 dollars versus putting $500 in per $3200-3300 of SHLD stock you may own. I don't think you're doing this the right way. ;D For every 85 shares of SHLD you own, you will get the right to buy a note for $500. (that cost is not going to be embedded in the right). You will also get for free the 17 warrants. So what you need to price out is the value of the 17 warrants + the value or negative value of for the right to purchase the $500 Note. Said another way, the rights are worth whatever amount greater than $500 -- since you have to pony up that money for the notes. So if you think the 17 warrants + the note is worth $680, the rights would theoretically trade at $180. the stock would drop by $2.12. (ignore for a second the actual inputs you used for your calcs). Sorry, you're right. I am looking at the end result when the transaction is done but I suppose SHLD will also trade at a different price by then too, affecting the value of the warrants. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 I wonder how all of this will impact option prices tomorrow. No word yet from the OCC or CBOE on option adjustments. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 Ecomdash Announces New Marketplace Integration with Sears http://www.digitaljournal.com/pr/2297669 Link to comment Share on other sites More sharing options...
BTShine Posted October 30, 2014 Share Posted October 30, 2014 Ecomdash Announces New Marketplace Integration with Sears http://www.digitaljournal.com/pr/2297669 I read that and am confused by the stat that 15 million customers buy from Sears' marketplace daily ...? They must be talking about both physical and online shopping, no? Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 Ecomdash Announces New Marketplace Integration with Sears http://www.digitaljournal.com/pr/2297669 I read that and am confused by the stat that 15 million customers buy from Sears' marketplace daily ...? They must be talking about both physical and online shopping, no? I think marketplace is just the online component with various merchants. Link to comment Share on other sites More sharing options...
valueinvestor82 Posted October 30, 2014 Share Posted October 30, 2014 Is anyone selling the rights beforehand? I would guess so given the price decline from $.19 or so to $.07. What impact does selling it have on those keeping stock? Link to comment Share on other sites More sharing options...
wisdom Posted October 30, 2014 Share Posted October 30, 2014 http://www.bloombergview.com/articles/2014-10-30/sears-has-a-deal-to-offer-its-shareholders Link to comment Share on other sites More sharing options...
krazeenyc Posted October 30, 2014 Share Posted October 30, 2014 http://www.bloombergview.com/articles/2014-10-30/sears-has-a-deal-to-offer-its-shareholders Whoever the author is, he and I are pretty darn close with out rights $$ estimate -- i had $2.50 a share as my guess -- but have no clue how accurate I am. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 Sears Holdings: Framework for Profit http://blog.searsholdings.com/inside-shc/shc-framework-for-profit/ Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 SHLD and SHLD2 option adjustments attached. Call holders get the shaft a little bit... the underlying value includes 1% of SHLDZ instead of 1.1% (1/85).SHLD_Option_Adjustments_10-30-2014.pdfSHLD2_Option_Adjustments_10-30-2014.pdf Link to comment Share on other sites More sharing options...
sampr01 Posted October 30, 2014 Share Posted October 30, 2014 Hi Mark I am holding calls, do we need to exercise the rights by Nov 8th. Please can you walk me through process. Thanks Link to comment Share on other sites More sharing options...
Luke 532 Posted October 30, 2014 Share Posted October 30, 2014 Hi Mark I am holding calls, do we need to exercise the rights by Nov 8th. Please can you walk me through process. Thanks I recommend contacting your broker to walk you through it. Link to comment Share on other sites More sharing options...
johngu Posted October 31, 2014 Share Posted October 31, 2014 Hey guys. I just wrote a seeking alpha article on valuing the rights. Getting numbers a bit different from the bloomberg article but I'm probably underestimating the volatility of SHLD at 30%. http://seekingalpha.com/article/2623035-valuing-sears-holdings-subscription-rights Link to comment Share on other sites More sharing options...
Luke 532 Posted October 31, 2014 Share Posted October 31, 2014 SHLDZ $162.50 print. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 31, 2014 Share Posted October 31, 2014 It's a fluid situation, obviously, as SHLDZ will start to arrive in accounts, but based on stock price of $36.04, last SHLDZ trade at $154.00 (154/85 = $1.81), the combined price is $37.85, or up 3% from $36.74 close. Link to comment Share on other sites More sharing options...
jeffmori7 Posted October 31, 2014 Share Posted October 31, 2014 SHLDZ $162.50 print. Wasn't supposed to trade around 1-3 $? Link to comment Share on other sites More sharing options...
krazeenyc Posted October 31, 2014 Share Posted October 31, 2014 It's a fluid situation, obviously, as SHLDZ will start to arrive in accounts, but based on stock price of $36.04, last SHLDZ trade at $154.00 (154/85 = $1.81), the combined price is $37.85, or up 3% from $36.74 close. is shld actually ex? usually the rights trade for 1 day on nasdaq before the shares are ex. Link to comment Share on other sites More sharing options...
PatOfThePig Posted October 31, 2014 Share Posted October 31, 2014 SHLDZ $162.50 print. Wasn't supposed to trade around 1-3 $? You got 1 right for every 85 shares you have, so 162.5/85= 1.91$ by share. Link to comment Share on other sites More sharing options...
krazeenyc Posted October 31, 2014 Share Posted October 31, 2014 SHLD is not trading ex-rights today. Nasdaq will likely announce the ex-date today. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 31, 2014 Share Posted October 31, 2014 SHLD is not trading ex-rights today. Nasdaq will likely announce the ex-date today. Yep, just interesting price action given that fact. Link to comment Share on other sites More sharing options...
HeresyValue Posted October 31, 2014 Share Posted October 31, 2014 So it was trading due bill? Link to comment Share on other sites More sharing options...
texual Posted October 31, 2014 Share Posted October 31, 2014 So let me ask, I own zero shares of SHLD but this bond does sound interesting - is there any way for me to purchase those rights or get into owning the 8% bonds with warrants at this point? Like for someone who is currently not interested in holding the common, can they own these bonds and have the right to buy shares down the road at ~28? Or is this only if you own the shares? Link to comment Share on other sites More sharing options...
jeffmori7 Posted October 31, 2014 Share Posted October 31, 2014 So let me ask, I own zero shares of SHLD but this bond does sound interesting - is there any way for me to purchase those rights or get into owning the 8% bonds with warrants at this point? Like for someone who is currently not interested in holding the common, can they own these bonds and have the right to buy shares down the road at ~28? Or is this only if you own the shares? Yes, you can just buy SHLDZ on the market. Link to comment Share on other sites More sharing options...
Luke 532 Posted October 31, 2014 Share Posted October 31, 2014 The rights are trading as ticker SHLDZ, just buy those. So let me ask, I own zero shares of SHLD but this bond does sound interesting - is there any way for me to purchase those rights or get into owning the 8% bonds with warrants at this point? Like for someone who is currently not interested in holding the common, can they own these bonds and have the right to buy shares down the road at ~28? Or is this only if you own the shares? Link to comment Share on other sites More sharing options...
heth247 Posted October 31, 2014 Share Posted October 31, 2014 So let me ask, I own zero shares of SHLD but this bond does sound interesting - is there any way for me to purchase those rights or get into owning the 8% bonds with warrants at this point? Like for someone who is currently not interested in holding the common, can they own these bonds and have the right to buy shares down the road at ~28? Or is this only if you own the shares? I thought you can just buy the rights and exercise them? But since you don't own any SHLD for now, why don't you wait after the bond and warrant separate, and until next time when the "bankruptcy talks" comes back again and buy the warrants directly at a much lower price? To me the warrants is more attractive than the bond. Anybody planning doing this? Link to comment Share on other sites More sharing options...
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