Friday - April 14, 2023
Today's newsletter will take 6.13 minutes to read.
DRS UPDATE: 54.83%* (estimated percent of GME shares direct registered)
On tap this morning:
GameStop NFT update
Did you know?
More Talk of Teddy IPO
Good Morning! This is Mother Squeezer, the newsletter that thinks Sue is hiding something and brings you updates and insights along with timely information about our favorite Activist Investor, Ryan Cohen, and our favorite stocks - GME and BBBY.
Kevin Malone suggests BBBY is buying back bonds, Sue Gove seems to be hiding something and more talk on a Teddy IPO.Investment Advisor, Kevin Malone, shared some insights on his Twitter account.
$BBBY bonds flooding our bond desk today https://t.co/lJ9UbY6WMj
— Kevin Malone (@Malone_Wealth)
Apr 12, 2023
u/Life-Relationship_77 starts a discussion questioning if it's BBBY who is buying back the bonds. The jury is still out but this is an interesting take.
This morning, an interview with Sue Gove, BBBY CEO, was released and investors were highly skeptical of what she had to say.
Watch the interview and decide for yourself.
Thursday Recap: BBBY traded between a low of $0.25 and a high of $0.28 before closing at $0.26. Trading volume was 115.79 million shares.
Cost to borrow: There were 2,700,000 shares available to borrow this morning and as of now, 2,100,000 remain. The cost to borrow has remained elevated at 21.2%.
Pre market: Bed Bath and Beyond is trading up $0.01 to $0.26 an increase of 0.19% on over 4.3 million volume.
Max pain: The current max pain for BBBY has remained at $0.50.
Thursday Recap: GME traded between a low of $22.33 and a high of $22.85 before closing at $22.55. Trading volume was 1.80 million shares.
Cost to borrow: There were 10,000 shares available earlier this morning. Currently there are 4,000 remaining. The cost to borrow has remained elevated at 11.4%.
Pre market: GameStop is trading up $0.03 to $22.58 an increase of 0.13% on around 11 thousand volume.
Max pain: The current max pain for GME has remained at $22.50.
Would you rather?
— GameStopNFT (@GameStopNFT)
Apr 13, 2023
Cast your vote!
Did you know?
There are a number of facial expressions and associated reactions that could indicate someone is lying to you. Some are caused by nervousness, some by chemical reactions, and others by physical reactions.
More Talk of Teddy IPO
u/edwinbarnesc brings us some perspective to put some of the recent FUD to rest.
GMERICA: Reverse Triangular Merger is the Goal with BABY Spin-off into TEDDY IPO
This is going to be a juicy read and is much needed to dispel the rampant FUD.
First, let's address the elephant in the room: there will be dilution.
However, it will NOT be handled in the way you might think (see below: Fortune Favors the Buyer).
The transaction that is about to take place will be extremely unusual and that's because it involves private investment into public equity aka PIPE deal, or for this case, an LBO- leveraged buyout to acquire the entire company.
I believe this is to purchase $BBBY in its entirety and u/blackmerger was the first to share the data from Pitchbook, a $25,000 subscription service that reveals active M&A deals:
Pitchbook records show an active deal for LBO of $BBBY - selling the entire company to a private buyer
In the Pitchbook above, Kirkland & Ellis is mentioned under a rumored LBO transaction to buyout the entire $BBBY company.
Well, for a rumored LBO, that same name is reported in the latest filing on SEC Form S-1:
Kirkland & Ellis receives copies about Form S-1
Copies of Form S-1 were sent to confirm the LBO transaction and to notify the "mystery buyer" in legal writing.
We know for a fact that there are multiple parties representing MULTIPLE buyers involved in this transaction. The first party was Hudson Bay Capital, representing another mystery buyer, that is holding the warrants to Bobby common stock and have converted those warrants into shares. However, $BBBY management has NOT issued the stock to HBC Capital and they also are not allowed to sell for up to 6 months.
On the other end, there is another un-announced buyer (speculating to be Carl Icahn's Newell Brands that raised $1.5B and/or Dragonfly via L Catterton). Brett Icahn also stepped off the board at Newell and sold his majority stake, likely to prevent a conflict of interest post M&A when he rejoins as a board member in the new company.
Icahn's Newell brand raises $1.5B - LBOs are Icahn's signature takeover move.
Also, shown in the latest 8K filing, a mention for the first time: "NEW SUBSIDIARY" aka new company. The filing has intentionally left blank fields and is concealing the buyer:
What is this NEW SUBSIDIARY? I'm leaning towards TEDDY which is owned by Gamestop.
Again, here is another data record from Pitchbook which shows an LBO transaction but for buybuyBABY:
Look at the date - Jan 13, 2023
Guess who always wanted the BABY? Look no further than Ryan Cohen.
Also, peculiar timing on that Pitchbook BABY rumor but it does line up with this tweet posted Jan 18, 2023:
The man has bought all the stocks - as in LBO of BBBY including BABY.
There is a reason why BBBY management hired 2 INDEPENDENT proxy firms to tell you vote FOR reverse-split because it is in shareholder's best interests.
$BBBY had two LEADING independent proxy firms to support management's decision to vote FOR reverse-split. One might wonder, why 2 proxy firms involved? Perhaps each representing the interests of its mystery buyer(s).
FORTUNE FAVORS THE BUYER
Doing the reverse-split will reduce the amount of available shares which is favorable for the un-announced buyer(s). How do I know this? Because it's written in the S-1 Filing, the same copy sent to Ellis & Kirkland representing the buyer:
From Form S-1, the reverse-split will be used to improve the terms in the final deal, likely spin off into IPO
What's interesting about the highlighted sections above is that the buyer will be limited to purchase only 19.99% of shares outstanding AFTER the share reduction caused by reverse-split.
Now why would they do that? So they can do this:
Infographic of reverse-triangular merger
Credit u/Real_Eyezz for initially sharing the Reverse Triangular Merger idea with me.
THE REVERSE TRIANGULAR MERGER
I have proof where this is going based on historical success of a similar event that rewarded shareholders.
In 1987, a similar transaction took place, which was also a unique M&A where Coca-Cola merged with Tri-Star Pictures:
Coca-Cola merges with Tri-Star Pictures
The months preceding the M&A between Coke & Tri-Star, Coca-Cola was buying a LOT of other companies. And after acquiring Tri-Star, Coca-Cola was limited to 80% of the shares.
After Coke acquired Tri-Star, they issued a special one-time dividend to shareholders.
The interesting part about that deal is the 80% percent share limit.
And why is that important? Reasons for a Reverse Triangular Merger:
THE NEW SUBSIDIARY COMPANY IS TEDDY
In the proxy material sent out to eligible voters, there is a particular line that reads:
on March 30, 2023, we entered into a Purchase Agreement with BRP. Pursuant to
the Purchase Agreement, subject to the satisfaction of conditions therein, including the effectiveness of a registration statement on Form S-1 that we intend to file,
They will be filing a statement on Form S-1, likely an amendment when the time comes to announce the NEW SUBSIDIARY which is likely the holding company which can be TEDDY HOLDING CO. which will later be used to spin-off and IPO for TEDDY.
TEDDY HOLDING to act as a vehicle, like a SPAC for IPO
Multiple parties representing multiple un-announced buyers in an M&A (likely LBO)
Likely an Leveraged-buyout (LBO) to acquire all of $BBBY as a company
Acquisition puts a limit on how much shares the mystery buyer can purchase up to 19.99% of outstanding shares after share-reduction via Reverse-Split
Reverse Triangular Merger has a hard limit of 80/20 split of the total shares outstanding
Following M&A deal closing, then a spinoff into IPO and issuing new shares in the NEW SUBSIDIARY company
All Jimmy and Bobby hodlers will receive dividend shares in the new company TEDDY
But don't take my word for it:
Ryan Cohen tweets "I love Coke" - dated July 13, a few days later TEDDY HOLDING is filed, a cohencidence?
This best time to be alive is now.
MOASS IS TOMORROW.
Edit 1: Gamestop does not own TEDDY, it is RC which makes it even more bullish.
Also, interesting thing about Kirkland & Ellis: they worked with Chewy and facilitated a 20% share exchange to help out PetSmart which effectively eliminated debt on them. Credit to u/generic-youth for sharing:
Guess who used Kirkland in the past? Ryan Cohen's Chewy to help PetSmart for debt restructuring.
The Coke example with Tri-Star Pictures was the same. By merging: it helped free up capital, restructure debt, and balance the books which made Tri-Star stock price go up.
Another way to look at it: say you wanted to buy a house, but can't afford the mortgage with your wages so you get Daddy to co-sign and that makes the lenders happy.
The same will likely happen with Bobby when acquired and the purchasing company's balance sheet will satisfy lenders, help create new credit facility, and eliminate Bobby's debt. It's a win-win and virtually ensures the target company $BBBY will not go bankrupt because its harder to take-down 2 companies vs. cellar boxing one.
Even better if the other company was previously cellar boxed and in the process of a greatest turnaround plan ever.
Maybe we'll get more buildings with lights on and see plane trips to oligarch countries.
Truly fun times ahead.
FYI- I voted FOR as the board recommends
I want the mysterious buyer(s) to close this deal asap and spinoff FTW
Not financial advice. I am somewhat of a regard myself.
Read the entire discussion here.
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Some of our Favorite Resources
GME: Richard Newton
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Financial Disclaimer: None of this is meant to be financial advice. We love Ryan Cohen, RC Ventures, GameStop and Bed Bath and Beyond, and like learning and sharing these insights and commentary.