Distressed Debt Investing

My 2 cents on Sears from an operational perspective: the equity is done. Bonds may have value depending on the cap structure. Don't buy for the turnaround.

Source? Years ago I worked in the logistics department of Sears. Frequently we would offload goods for a gross loss, not even net loss because we had trailers of old product sitting around. Yes that's right, trailers full. Ran out of space in the warehouse. That inventory on the books? Complete shit.
 
Thanks for the insight there. I agree, I would have zero expectations of it being a turnaround play. Like you said either a capital structure play or just hoping they survive through the maturity of your bond....not too confident with the second option!
 
jj90 said:
My 2 cents on Sears from an operational perspective: the equity is done. Bonds may have value depending on the cap structure. Don't buy for the turnaround.

Source? Years ago I worked in the logistics department of Sears. Frequently we would offload goods for a gross loss, not even net loss because we had trailers of old product sitting around. Yes that's right, trailers full. Ran out of space in the warehouse. That inventory on the books? Complete shit.
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Add to that their CEO is a narsasist out of touch a-hole who sequesters himself in a mansion in Florida and only shows himself on a once a week video conference to scream at some poor employee about why their attempt to be like Apple isn't working. Guy's a total loose canon.
 
The nearer maturity bonds are not trading that far below par - mid 90s for the 2018, mid 80s for the 2019s. The stuff around 2030 is in the 40s, much more speculative.
 
Sig said:
Add to that their CEO is a narsasist out of touch a-hole who sequesters himself in a mansion in Florida and only shows himself on a once a week video conference to scream at some poor employee about why their attempt to be like Apple isn't working. Guy's a total loose canon.
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hahahahahahaha
Was that a shot at Trumpy? :D:D:D
 
MoreLeverage said:
The nearer maturity bonds are not trading that far below par - mid 90s for the 2018, mid 80s for the 2019s. The stuff around 2030 is in the 40s, much more speculative.
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I noticed that as well. One of the closest to maturing, the 10/2017 bond is trading lower than some of those for 2018/19, I believe several of those are secured though and the 2017 one is not so just pricing in that additional risk.
 
Sig said:
No, actually that guy's worse, except Sears is the only thing he can destroy.
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I made a post about him here way back....I'll see if I can dig it up.
I've followed him since the RSH days.
He's still a billionaire at last check. And thousands of worker bee's were screwed.
 
So slightly random question, figured I'd just ask it here first instead of creating a new thread.

I found a small closed end fund that is pretty heavily discounted. All its holdings are public except one which makes up a considerable portion of the portfolio. Coincidentally, the fund is trading at a basically the same discount as the size of this position.

I dug into the private company, they put out an annual report, do a stock valuation annually etc and based on their financials it just doesn't make sense why this big of a discount. Liquidity sure, but not enough to discount the whole position essentially! Looking back over the past 15 years the fund has consistently ranged from a 10-20% discount.

So my question is, suppose someone with deep pockets wanted to play this, how would they go about it? I don't know if there is even a mechanism or way to buy out a closed end fund. Seems to me that any premium you could make would be eroded instantly on the news. Could somebody take a controlling interest and then try to force them to sell to realize the gains?

I was interested in the play until I saw how long the discount has persisted. Just was trying to think how it would be gamed to remove that big NAV discount. It is very likely I'm wrong on this whole thing, but it seems if you could buy out the fund at the current price you'd get this private company for free essentially.
 
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