Ran Moshe

Long/short equity, deep value
Ran Moshe
Long/short equity, deep value
Contributor since: 2013
Thanks for the detailed reply.
Regarding your first point (risk of SHLD liquidity event):
I don't think that's going to happen, but even if it does, SRG does not have to replace all the space immediately. At an average of just over $4 per sqft from SHLD, it can replace just %40 of the space at $10 per sqft to compensate for the lost revenues. Typically, the new tenants pay for most of the renovation cost.
Re the second point (who the tenants are going to be):
I don't know who the tenants will be, but that's the reason I compared the valuation with GGP and SPG valuations. The market seems to believe brick and mortar retail isn't dead just yet. Of course, if you disagree you can always short the sector.
Re the third point (unique space configuration):
You may have a point there. I did not look into the physical configuration of the stores.
Re the 4th point (Lampert and Berkowitz had to invest more money into SRG, so their opinion is not to be trusted):
Lampert and Berkowitz are still buying more SHLD, and Buffett's 8% stake in SRG is also a fact. They may be wrong, but it looks like they believe both are cheap.
Berkowitz seems to think SHLD is cheaper (his estimate is at least $125 sum of parts per share)
When you sum up the balance sheet, you seem to ignore their long term debt. With it, the company has only $1.5B in tangibles. Is there any reason to ignore it?
hmmm... Q1 EPS was -2.85. Adjusted EBITDA was -2.00... Please fix
5982831, if they do that, they might end up with a negative strike price
Axius, it is a warrant for SHLD, not the REIT
Thanks for the comment. Nice idea.
The notes will not be publicly traded, but will be transferable. The warrants will be publicly traded though, under SHLDW
I don't understand the comparison between Land's End and JCP / St. John's Bay:
The former was spun off and given to investors. If you held on to it, you made a nice profit by now. But as a client, you can still get Land's End products from the Sears website or stores, just as before.
On the other hand, JCP just discontinued St. John's Bay - a quality low-price brand, and alienated much of its client base by that.
Again, there's no comparison between the two cases.
One obvious catalyst, which Lampert keeps touting, is the double spending on marketing - both through the traditional ads and coupons, and through the membership model.
Once that double spending stops, they should be close to breakeven by my calculation.
Hi Josh, thanks for the article. If I'm not mistaken, the price adjustment for the dividend is relative to the stock price (so the adjustment is <new strike = old strike * [dividend/stock price]), and not as you wrote.
Also, there is an adjustment for the number of stocks given for each warrant, that's also determined by the dividend.
After going over the numbers I actually agree. The figures do include Sephora - but only the new rollouts, not the existing Sephora stores.
Thanks for the specific store information, very helpful!
I don't disagree - just noting that they have a long way to go to get anywhere close to Bill Ackman's mid-level expectations. The 33% increase does *not* include Sephora, so at the least there's a silver lining here.
An important point supporting the bullish view on JCP, is that traffic begets traffic. Once customer flow increases to one shop, the rest of the shops enjoy the extra business as well. So as Ron Johnson says, this is in fact a retail startup - and it should not be judged according to existing numbers. Just to keep in mind, this is not a classic value investment, more a VC type of play...
From Ken Hannah in the 3rd quarter conference call:
"Now, in that space, we are including their fair share of the aisle, of the cash wrap, of everything else, so we are not backing away on that and just
calculating on the merchandising pad. We are talking about the full 64 million square feet in the store. So the only thing we are excluding there is
all the back-of-house and the office space, okay? So when you look at that, $269 per square foot of productivity, as we mentioned, it has got Sephora
in there, it has Mango, it has the jcp brands for Men's and Women's, Levi's, Arizona, Liz Claiborne and Izod."