Sears Holdings Corp. (fka SHLDQ)

[MrMadness]

My compilation of discussion notes taken thus far:

Ok everyone, brace yourselves this is going to be a long post. To start off, we are going to be listing the big ideas, breaking down what we know about each, and finally what facts and citation I can provide that appear to me the best fit for how this will all go down. Thanks everyone for working so hard and doing so much research with me. I've been having a blast with this.

(Disclaimer for yesterday)
Yesterday I had claimed the possibility that a massive change in bid/ask on my TD account could have indicated a lock in the price value. After multiple examples of similar occurrences, I have to agree that this was just a cool coincidence that lined up with previous assertions of expected stock value. No doubt, we will see growth next week, but probably not a start at $3.

The overarching ideas:

1. Eddie owns 73% of sears holdings, and is still tied to us, thus we have value as anything he does moving forward would be like any forward progress in any normal company.

2. Eddie is no longer tied to SHLDQ, has taken 73% of the assets out of SHLDQ and has gone private. This would leave SHLDQ as a separate entity from sears (yes a shell), but what has been left behind is essentially a massive pile of cash for the taking.

3. Eddie has pulled the majority of assets away from SHLDQ, but is currently the only one capable of securing the NOL's left behind in the SHLDQ shell. This gets really interesting, will explain in greater detail below.

So lets start with the NOL's issues since both idea 2 and 3 are tied directly to them. For anyone who doesn't know, NOL stands for "net operating loss", and are essentially tax breaks that can be the equivalent of straight cash for the right buyer. Currently, there are $5 BILLION in NOL's tied to the SHLDQ ticker. This makes our stock very attractive. Now there have been speculations that Eddie was able to take the NOL's in his $5.2 billion deal, however these are very difficult to transfer, and since Eddie has only bought SHLDQ assets, and not the company outright, it doesn't seem possible that he could claim the NOL's. My understand is it's an all or nothing scenario with these. So lets discuss outcomes for 2 and 3.

For number 2, SHLDQ is left a shell worth about $5 Billion in tax breaks, and (speculation on this, please confirm) a few million or more in property assets. Now for idea number 2, anyone in the world could theoretically buy SHLDQ out to snatch the NOL's. The thing is they also bring current investors along. This is the first mention of the 8K form originally drafted January 17, and further amended on February 8th. The section of the 8k that is important to us is page 38-39, section 2.2. This section states that any current share holder (defined as seller) would have stake in any company that would acquire SHLDQ, by means of their shares bought or exchanged (The understanding of this text by the majority of others I've discussed this with) This would mean that even if Eddie decided not to go for the NOL's himself and another company bought SHLDQ out, the current share holders would be incorporated or their shares bought out at a premium. Now a lot of people are discussing who would buy SHLDQ and what they value it at. To be honest, it doesn't matter from the investors perspective. The price would be set for any company all the same, and the buy out would have the same monetary impact immediately on the stock. Long term, we can all hope someone like Amazon grabs us, but again, that's opinion and not fact.

Idea number 3 is pretty interesting, and I do tend to believe this one a bit more over number 2 for a very simple reason. Even if it was possible for anyone to buy SHLDQ out, you would still have to obtain the 73% of common stock shares that Eddie owns personally, which is valued at about $1.2 billion. Since the cost of obtaining all of SHLDQ would be $1.2 billion less for Eddie, it makes the most sense for him to go for it. Now as for Eddie being the only person that could buy SHLDQ out, that I'm not sure about. If Eddie is seperated completely from SHLDQ, there would be no reason someone else couldn't purchase the remaining assets, however if Eddies 73% still had ties to SHLDQ, he could refuse to sell thus not allowing anyone to make the purchase. Which leads into idea 1.

Now, this will be the most controversial, because there have been a lot of claims to the contrary. However I have been doing a shit ton of reading, and I actually believe this to be the most likely outcome. Again, way happy to take criticism and if you have the proof I want to see it, but here is why I think Eddie is still stuck with us.

Idea number 1 indicates that Eddie is a common stock shareholder just like you and me, and that his power comes from the fact that his is currently an overwhelming majority shareholder at 73%. I think a lot of the confusion with whether or not he is a part of SHLDQ comes from the fact that Eddies hedge fund and holdco are what made the initial purchase, which in itself is a private institution. However, after reading through the entirety of the Schedule 13D Amendment number 76, I believe that Eddies private company bought 73% of SHLDQ common stock, which forced him to step down from the chairman of sears due to the fact it would be considered insider trading going forward. The Schedule 13D form indicates that what was purchased was in fact common stock, and says so at the top of the document.

Currently, my bets are on one of two outcomes. One, Eddie is private with 73% but knows about the NOL's and wants them, or he is in fact still apart of SHLDQ and plans on creating a new business model (which he himself stated they were doing along with keeping 45000 jobs) and building value in his newly gained shares himself. I have theorized that Eddie would make the play to get SHLDQ on the nasdaq as fast as possible to allow his friends with other hedge funds to buy and trade for faster growth, but that is speculation.

Thanks again everyone. I know there are some things I passed up in the small details, I'm running late with personal work and I have to get back to it. I'll be back on to see the explosion of discussion this one caused :) Have a great day!

P.S. Short term goal, probably some slow growth. People get excited about this kind of potential, however the force is strong with Shorts so you never know when you could see a big dip. Long term, this thing is going to make a ton of money. I've already bought in and I'm just going to leave my money where it is. Best of luck!

Also I forgot to add my damn links so this is an edit:

Schedule 13D amendment num 76.
https://www.sec.gov/Archives/edgar/data/923727/000119312519036184/d673785dsc13da.htm

Original 8-K form (January 17th)
https://www.sec.gov/Archives/edgar/data/1310067/000119312519016016/d689966dex21.htm

Amendments to 8-K
https://www.sec.gov/Archives/edgar/data/1310067/000119312519041193/d704657dex21.htm