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Hey guys. Wanted to throw something out here for people to discuss. I’ve done a lot of research over the last two weeks on this stock and my stance is still that investors that are in this for the long run are solid. Up until now I’ve backed everything I’ve shown with links and documentation, however college life has me swamped at the moment so I wanted to share something that isn’t quite fact, but not quite speculation either so just take it as you will.
Currently, this whole ongoing event with SHLDQ is a mirror image with several of the current law firms bankruptcy cases that is handling this one. In fact, this law firm has handled the top 5 bankruptcy cases in US history, and the thing I noticed is a few of them had similar NOL, common share, and privatization of oldco assets. What I want to point out is that in the end of these, in all cases, the common stock was reverse merged in order to maintain requirements for NOL acquisition, in which case there was a share exchange for current shareholders. Now from what I’ve read some had dilution, others didn’t. That’s it’s own discussion, but as it stands this case is looking to be a text book mirror image to several other plays made by the same law firm and the common share holders all did fine. I’m glad we are discussing the more intricate material and technical workings of the law, but I don’t see this diverting from what has worked for these guys before and made tons of money. Anyway, I’m writing this between classes on my phone, I’ll chime in maybe later this week. See you all later!
MM’s fighting hard to keep this down
I am still waiting on a reference to NOL limitation exemptions through chapter 11 bankruptcy though. That's my main point of interest.
I'm new to this board as of last week to, and I'm not confirming anything. I specifically said that he had good data but I wanted to have some holes checked. Currently, he has provided no backing to my specific questions and has tried to deflect my question. Obviously I've poked a hole in the argument and that's as far as it will go. My point here is there needs to be room for both sides to talk with out being harassed or accused of a hidden agenda when they are presenting documentation and are being reasonable to talk with. In relation to the buyout thing, Item 4 Purpose of transaction states as follows:
No, I just want data. He says there is a 30% limit on NOL's, I want proof. Currently, I've received none and my view point stands that this is good long term. Don't try to convey my views differently, I don't appreciate it.
Right but did this go to the debt or the assets? It says debt there, but then what did he use to buy assets, or was this 5.2 billion enough to cover both of what he needed? Basically, how the hell did he get almost all of SHLDQ assets with 5.2 billion if it was worth 7.55 with that money also going to the debt at 11 billion? 5.2 billion doesn't make a dent in a total of 18.55 billion dollars of "stuff" that needs to be bought. Things don't make sense here :/
But this doesn’t address my main point that the availability offered to the NOL’s through chapter 11 are far greater than 30% which would offset things by a lot. Unless you are saying that 30% is max including in chapter 11, in which case I would need documentation.
Question for you. Do you know exactly what Eddie or any of his hedges have actually spent money on. We have a 5.2 billion number, the acquisition of most of the assets of sears, but what did that 5.2 actually go to? I’ve heard straight to debt, I heard buying the assets, I’m not sure if he has only made 1 purchase, or multiple.
Might want to read what rc1968 and I are discussing. He brings valid points of concern to the table. While nothing detrimental has been proven, his theories hold ground and the math checks out. We should focus on understand bankruptcy law and how it applies to NOL’s before the board tries to hype any further.
Rc1968 is really killing the research too. While I’m hoping he’s wrong, dude is putting in the work and approaching the board with his findings in a very educated and respectful way. I really appreciate it.
Ok your math checks out, however this goes into the question of what Chapter 11 bankruptcy does to the NOL's. Correct me if I'm wrong, but the 30% is correct, however only under normal circumstance. I only read a rough synopsis of bankruptcy law but from what I gathered restrictions can be greatly expanded when considering NOL's being transferred from one company to another through buyout. This is where I've wanted others to check my research because I'm not an expert in bankruptcy laws. If your 30% is in fact all they can pull, I agree with your statements and things get exponentially more complicated for current SHLDQ investors. However I believe it's much higher than this. It also played into the theory of why Eddie signed SHLDQ into bankruptcy in the first place. It would have been less hassle for him to just buy out assets through a purchase agreement rather than going through bankruptcy court if he just wanted to take assets and run. From what I've seen, Eddie filed for bankruptcy due to the lifted restrictions in buying power from a hedge (his holdco) and the lifted restrictions gained towards tax breaks (NOL's). All that said, great job on the research, let me know what you find.
Edit:
Forgot my damn links again. Below is a couple chart breakdowns of SHLDQ assets/liabilities. I'll also add a few links to simplified NOL's and how they work links. Nothing too big there for someone like yourself but it had a point or two in there for me I was unaware of.
Assets/Liability break down (marketwatch)
https://www.marketwatch.com/investing/stock/shldq/financials/balance-sheet
Assets/Liability break down (morningstar)
http://financials.morningstar.com/balance-sheet/bs.html?t=SHLDQ®ion=usa&culture=en-US
How NOL's work (breakdown #1)
https://www.nolo.com/legal-encyclopedia/how-deduct-business-losses-net-operating-losses.html
How NOL's work (breakdown #2)
https://www.wallstreetmojo.com/complete-guide-net-operating-loss/#ma
Chapter 11 Basics
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
That was my understanding of the tax law behind the usage of the NOL's. My most recent theory I canceled typing up because it was like 15 pages long, but to give you the TL;DR I showed connections between keeping the NOL's intact, POR (and the lack of one), Chapter 11 bankruptcy and satisfying creditor through full purchase of assets and liabilities, and finally showing that Eddie would make money either way, the only variable being his reputation. Leaving everyone in a 50/50 chance position based solely off of his morals. If Eddies a good guy and wants to keep a good reputation, we win. If Eddie thinks he can continue to go about business usually and screw us over, we loose.
If Eddie wants to proceed with us, he'd have to make a buyout, and then essentially move us straight to NASDAQ to keep his NOL usage which puts him ahead of the liabilities. This to me makes the most sense. He starts with 1.5 billion in surplus, keeps his reputation intact, and starts trading on the NASDAQ asap which allows for his friends with hedge funds to dump money into as well. With the new ties to Amazon being out, I think he fully plans on reviving sears in a new manner, but I think public opinion is going to have to be high for it to happen. If it comes out that Eddie is happy to rip all his shareholders off, he won't be able to maintain business, and would possibly even loose his deals with Amazon.
Hahaha if Eddie buys everything out and goes public again I'm sure he'd want to get to NASDAQ, I mean that's a good milestone to show investors your company is doing good. But that's so far down the line its all guess work. Again, Eddie is in a position right now to make money either way. The only changing variable is his public appearance.
Ok so I have a few things to pick at. First off the data I have for the assets is closer to 7.55 billion, not 5, which does make a difference in this instance. As for the NOL's, last I checked the current value available due to the restrictions lifted in chapter 11 bankruptcy totals around 5 billion. Your debt number is spot on at 11 billion, however, when you add up your NOL's and assets you come out with 12.5 billion in assets against 11 billion in debt. While I do think Eddie would prefer to drop the 11 billion in debt and just run with what he has, it would be an overwhelmingly bad PR move when he could still take responsibility of the liabilities that are there and come out with more money than he started with. Currently, and THIS IS MY OPINION, Eddie has two choices. Take the money and run with very little hope of being able to over come the bad PR and end up right were he is now, or take the buyout, make money, and look like a hero. He's working on a solid business model that would see sales rise, and the fact that he's now working with amazon's alexa means there are at least talk between him and Jeff Bezos or someone else of authority in the company. These billionaires don't play the short term profits game and stay billionaires. Stocks are every bit public opinion as they are hard facts and data and I think we've all now seen this first hand with this one in particular. Data wise, Eddie wants the NOL's, and he currently has the assets. He really only has two choices to make, both of which he still makes money. It comes down to how he wants to be viewed going forward.
Question:
Would a buy out of everything satisfy the requirements for the creditor in the chapter 11 bankruptcy?
And bought*... I need coffee
Lol you’re*
I really appreciate the work your putting into this. Our views differ but thank you for the DD, solid job. With all this transfer of intellectual property, any chance we are already owned by holdco and don’t know it. You think he bout the ticker too?
We need the finalized 8k
The bid/ask is creepin up again.
I flipped the numbers by accident. $1000 to 200 shares.
Oops I typed the share to money numbers backward :)
I found in a March document he was willing to do 1000 shares for $200 bucks which is a $5 dollar buy out and would allow for NASDAQ trading. This however is very old news but it's the only thing I got for a reference point. If he offered it once he might offer the same again. Here's that old form.
March schedule 13D
https://www.sec.gov/Archives/edgar/data/923727/000119312518094368/d570533dsc13da.htm
Also, I crunched the numbers, you right 49%~ish
Thanks for this. So, I guess the big question is are we good. My vote is still yes for long game. What about you?
It actually lists 4 entities with 73% ownership, and its because 1 is eddie and the other 3 are owned by Eddie. Buck stops at him, he in fact owns what they own. I'm not arguing whether or not he has 73%, or 49.5%, I'm still reading up on that. But the multiple 73%'s are just different groups eddie owns.
What do you think about my speculation question involving the POR? I mean, I don't actually believe you would make a POR for a NOL shell. So, it's extend until someone else buys right? To satisfy creditor's interest a POR or full purchase of assets must be in order. Or am I mistaken?
Thanks for that info. So does he still maintain majority?
Speculation question:
You think Eddie had the POR date extended because he has no intentions of writing one? Think about it. If SHLDQ has the majority of it's assets controlled by Eddies holdco, this ticker can't actually leave bankruptcy because there isn't anything left to reorganize. The only thing left is for Eddie to put a bid out to purchase the rest of SHLDQ. The only reason they would extend the date is if Eddie needed more time to sort out the bid for the complete buy out.
Oh its going to be very ok. If he's only had the assets private for 10 days and is already releasing new Kenmore and Craftsman brands then he's moving insanely fast. More to the point however, Eddie has to have two things to pull this off. He needs his assets, and he needs his NOL's. He has the assets, and he now needs the NOL's. He can't sell his shares or he looses majority, he has to buy out and either merge the whole thing, or set an offer to buy out the rest of the public's shares. Either way share holders a looking good on this.
Ok I now have conflicting info from the documents. Schedule 13D has disclosure of completion of the assets purchase. 8-K doesn't. However I think the Schedule 13D is a newer document. So it looks like Eddie grabbed the assets on the 11th leaving SHLDQ a shell, however he does maintain 73% ownership of the SHLDQ shares. This leads up to what I was saying before, looks like we are in a merger situation here.
It's not a shell yet. Purchase is approved, but hasn't gone through. Paragraph 3
February 8-K
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657d8k.htm
Ah I see it. Paragraph 3. The buy was approved on the 11th. Not yet closed and finalized. But that means SHLDQ is still totally intact and that Eddie has 73% of the common stock. So, a news release that is good for sears should raise the stock and make him money.
February 8-K form (paragraph 3 for sale approval)
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657d8k.htm
Ok, he has 73% of the SHLDQ common stock. I thought that came from the 1.2 bil. Can you explain this further for me?
The schedule 13D for proof of ownership
https://www.sec.gov/Archives/edgar/data/923727/000119312519036184/d673785dsc13da.htm
Ok, looks like everyone to this point has been right and wrong. People arguing shell company with NOL's, yup you got it. The major assets were purchased and are owned privately by Eddie holdco. These brands are still sold through sears however soooo grey area on who gets the money? Probably commissions, we need to check this. For people arguing Eddie is still tied to SHLDQ, you are also right. He does in fact own 73% of SHLDQ common stock. Which made no sense to me until I realized he has made two separate purchases here. When he did the share purchase, he put 4 billion down to clear some form of debt in addition to 1.2 billion in common stock (the 73%) I have research to do, so this next thing is my guess and only speculation, but to me this looks like Eddie is gathering all of sear's assets and resources under his private company, but he is forced to maintain majority shareholder of the original company to utilize the NOL's. Since's he's moving assets, the only way he can pull this all together and keep is 5 billion in tax breaks is to merge. Please check me on this, but I'm like 90% on this that he is now in a position where he has to bring this ticker into a purchase agreement to keep all the stuff he wants.
Yup you right. Thanks for helping!
Ok I found it. Looks like the purchase did in fact go through. However, I just realized I've missed something major. There were two purchases here guys. Eddie purchased assets, but also put in 1.2 billion in SHLDQ common stock. He's playing both sides of this.
That is the January 17th publication. This has been amended since. Please refer to the February 8th Edition. Here's the link.
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657d8k.htm
Here's the links to the most recent 8-K and the 2.1 amendment page with the assets agreement. I can't find it, let me know if you do.
Most recent 8-K
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657d8k.htm
2.1
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657dex21.htm
I can find no reference to Kenmore actually being sold to Eddies holdco. I don’t know if it was written out, but I can’t find where it says the purchase went through. In your link, the purchase wasn’t scheduled till February 8-19th. So the buy has been made, but I’m not sure what all they got.