Friday - January 6, 2023

Today's newsletter will take A REALLY LONG TIME to read.

DRS UPDATE: 49.75*% (estimated percent of GME shares direct registered)

*source: Computershared.net

On tap this morning:

• Thursday recap

• Did you know?

• I Think an M/A is 100% DEFINITELY Happening and Here's Why

Good Morning! This is Mother Squeezer, the newsletter that is fighting this financial battle with you and brings you updates and insights along with timely information about our favorite Activist Investor, Ryan Cohen, and our favorite stocks - GME and BBBY.

Yesterday was...tough. We knew days like this could happen. Especially as we approach the grand finale. What else could the bad guys do? Their hope is to drive the price down enough to be drive companies to bankruptcy. However, we're not listening to what the mainstream media is saying. The risk is what creates the opportunity.

Next week we have earnings coming out on Tuesday and hopefully the announcement we've been waiting for. Until then, we...wait.

Thursday Recap: We don't want to talk about it.

Cost to borrow: There were 40,000 shares available to borrow this morning and as of now, 0 remain. The cost to borrow has climbed to 15.5%. 

Pre market: We don't want to talk about it.

Max pain: The current max pain for BBBY has remained at $2.50.

Thursday Recap: We don't want to talk about it.

Cost to borrow: There were 250,000 shares available earlier this morning. Currently there are 0 remaining. The cost to borrow has climbed to 21.6%.

Pre market: We don't want to talk about it.

Max pain: The current max pain for GME has remained at $18.50.

Did you know?

Just before Redbox was acquired by Chicken Soup for the Soul Entertainment, the stock was trading at $2.42. It climbed to $18.20 through the month while the M&A deal was being finalized.

I think an M/A is 100% DEFINITELY Happening and Here’s Why

(reposted from r/bbby by u/Dan23DJR)

Side note - I wrote this sort of rushed, so I was trying to save time but the two filings in December that are being kept confidential are S-4/A's, not S-4's. The only difference is that the /A signifies that it is an amendment to the original S-4. They're S-4/A's because the actual bond deal is the same one all the way through, they just kept on amending the date that it would end on, so yeah when you see me write S-4, the filings are actually S-4/As but I was trying to write this out quickly lol. Enjoy the jacking!

Also this is kinda long but please bear with me

So Today they filed an NT 10-Q, and an 8-K, with the NT 10-Q being the one talking about why their earnings will be later than what it’s supposed to be (10th Jan) and the 8-K announcing that the Bond Deal was scrapped

Let’s get some things out of the way before I get into the write up.

What’s an NT 10-Q Form?

“SEC Form NT 10-Q is a Securities and Exchange Commission (SEC) filing required for companies that will not be able to submit their 10-Q filing (for quarterly financial results) by the SEC deadline or in a timely manner. Mandated by SEC rule 12b-25, Form NT 10-Q requires the registrant's information and explanation of the reason for why the 10-Q is delayed. The form also allows companies to apply for relief from the deadline.”

What’s an S-4 Form?

“SEC Form S-4 is filed by a publicly traded company with the Securities and Exchange Commission (SEC). It is required to register any material information related to a merger or acquisition. In addition, the form is also filed by companies undergoing an exchange offer, where securities are offered in place of cash”

What’s a CTO (Confidential Treament Order)?

“A confidential treatment order (CTO) is an order that provides confidential treatment for certain documents and information that a company would otherwise have disclosed in filings with the Securities and Exchange Commission (SEC). The CTO is granted by the SEC in response to a company's request—known as a confidential treatment request (CTR).”

“The SEC only allows certain types of information to be kept confidential, notably, information that, if disclosed, could negatively affect the company or its financial position.”

Why would a company want a CTO, and an example of how they can be useful

“Companies would typically seek a confidential treatment order to keep information secret that would otherwise put it at a competitive disadvantage if revealed”

For example:

“A company may apply for a confidential treatment order by completing a confidential treatment request to keep information regarding a pricing arrangement made with a potential acquisition target secret.

This request could be made on the basis that the company's competitors may use this information to go after the target with a more competitive price.”

Why would a company file an NT 10-Q?

“A very common reason for an NT 10-Q is a merger or acquisition, which prevents results from being incorporated in time for the filing. The SEC provides for "unreasonable effort and expense," with a suitable explanation, as part of the application for relief. Late filings may also be because of uncertainty surrounding litigation, due to a company’s auditor not having yet completed its review of the company’s operations, a sign of a company in financial distress, or because a company emerging from bankruptcy needs more time to complete the required disclosures.”

So first of all, the only reason they filed the NT 10-Q was to cover their asses for announcing their Earnings Report late (10th Jan). You probably read it, saw all the doom and gloom, and panicked. There really is no need. Remember before the earnings date was announced, we were all trying to figure out when it would be, and came to the conclusion that the latest they’d be allowed to file it would be 5th Jan? Well we were both right and wrong. The actual SEC time limit would have been to announce it today on the 5th Jan, but they decided to plan on releasing it late (10th Jan). They aren’t supposed to do that, and that’s why they filed the NT 10-Q today.

Why did BBBY lay it on so thick in the NT 10-Q today about the financial woes of the company? Because they needed a suitable explanation, as part of the application for relief because the SEC only provides when filing it on time would cause ** "unreasonable effort and expense"**.

In layman’s terms, BBBY is a student who was meant to hand his homework into the teacher today, but they didn’t, and the teacher only lets students off the hook when they have a good enough reason for why they couldn’t do their homework. If BBBY hadn’t laid the financial woes on so thick, their excuse would have been about as useful as “My dog ate the homework”. Instead their excuse for not handing in the homework on time was more like “Sorry Mr. Gensler, Life at home has been really busy and stressful recently because we are currently moving houses and my parents are never home so I have lots of chores to do and I didn’t have time to do my homework”

You get the idea.

Here’s where it gets interesting. Like Investopedia said, A very common reason for an NT 10-Q is a Merger or Acquisition which prevents results from being incorporated in time for the filing. Yes, it can also be because of uncertainties around litigation because the companies audit isn’t complete yet, but it’s far less common for an NT 10-Q to be filed for this reason. It’s far less common because basically unless a company has been cooking the books, that scenario doesn’t happen. So unless you think BBBY has been cooking the books, there’s no reason to think the Earnings Report is going to be late because the auditors aren’t happy.

Here’s where it gets even more interesting and reinforces the idea that the NT 10-Q WAS in fact filed because an M&A is imminent.

You remember BBBY extending the Bond Exchange twice in December (Dec 6th and Dec 20th) right? And do you also remember that before this, every time the bond exchange was extended, an S-4/A form was filed for it? (The /A just means amendment because each bond extension was just an amendment of the last one to set the finishing date at a later time). … Well guess what, the SEC still hasn’t made BBBYs Dec 6th and Dec 20th filings public yet. Why might that be? Well it might be because an M&A deal was being sorted out in December, hence the information about it went on their Dec 6 and Dec 20 S-4s.

Let’s think about this for a second. BBBY announced to the world today in their 8-K that they have terminated the entire bond exchange deal. If the two December S-4s only contained information about the Bond exchange getting extended, that would eliminate the need for the SEC to keep those two S-4 forms confidential, and they would have been released today because the information inside of them would be irrelevant since the exchange is cancelled, and BBBYs termination of the bond deal is public, therefore there would be absolutely no need to still keep the Dec 6th and Dec 20th S-4s private.

BUUUUUUUUUT

What if those two S-4s contained Merger or Acquisition information as well as the bond exchange info? After all, an S-4 only contains info about 3 potential topics, a merger, an acquisition or an exchange offer. And we now know that the SEC has no need to keep bond exchange details private.

That leaves us with, in my opinion, concrete evidence that the December 6th and December 20th S-4 forms contain information about a merger or acquisition in the works.

I mean seriously, if you can provide a rebuttal/counter argument to why that logic is flawed, or why else the SEC would keep their S-4s private, please do explain why.

It’s clear that BBBY has a CTO on these forms, there’s no other reason I’m aware of for why an S-4 could be kept entirely private.

And per the SEC, a CTO can be granted to keep information confidential, notably information that if disclosed, could negatively affect the company or its financial position. And like our example, a company may apply for a confidential treatment order to keep information regarding a pricing arrangement made with a potential acquisition target secret. The request could be made on the basis that the company's competitors (let’s say Williams Sonoma for example) may use this information to go after the target with a more competitive price.

BBBY is well within their rights to have a CTO for their M/A info, I reiterated that part just to cancel out the idea that even if the Dec 6th and Dec 20th S-4s contained M&A Info, the SEC wouldn’t keep it private

With that in mind, don’t you think it’s pretty clear that there is an M/A in the works? Like if you don’t, and you read all that, please explain why you think so because I find this hard to argue with

EDIT - Coming back to add some more, had to go for a bit

Look at this post from u/Region-Formal: https://www.reddit.com/r/BBBY/comments/103zdvj/top_is_bbbys_statement_today_bottom_is_a/

If you were feeling bad about BBBY commenting on their financial woes in the NT 10-Q, just read it. They read so similarly, like it's actually uncanny. Did they go bankrupt? No they got acquired like region formal says and their stock went from 2.42 to 18.20 .

So what we know for sure which is indisputable:

1) An NT 10-Q is very commonly followed by a merger/acquisition

2) The idea that they filed an NT 10-Q because financial auditors spotted something fishy goes out the window when you remember than Cohen signed off the Form 144 basically saying 'Yeah, everything is in order here, they haven't been cooking the books'. He would be deep up shits creek if if turned out there was something wrong with the books and it wouldn't be a risk worth taking.

3) The Dec 6th and Dec 20th S-4s MUST contain M/A related info, because per the CTO eligibility, the SEC only allows keeping certain types of info confidential, notably info that if it was released, it could negatively affect the company and its financial position. Lets say those s-4s contain info about the pricing that the acquirer and BBBY had agreed with, if that was released prematurely then it would open the door for a rival to swoop in with a cheaper offer. So yeah for the S-4s to be kept confidential THEY MUST CONTAIN M/A INFO!!! if it was just purely bond extension info I doubt the SEC would even grant the CTO and if they did it wouldn't still be standing because hiding weeks old bond extension info that is now irrelevant any way doesn't protect the company from potential financial harm.

4) Taking one filing like (NT 10-Q) alone and saying 'it must be m/a stuff' because those filings are often followed by an M/A would be a pretty flimsy argument by its self, but couple that with the S-4 stuff, it then actually reinforces the argument pretty well, and makes it hard to discredit the theory.

5) When Icahn said months ago that he was looking at getting into a company but he didn't want to talk about it and couldn't say anything about it because the earnings weren't out, well, since then IEP hasn't acquired anyone and it's been MANY ERs later; mathematically speaking, the chances that Icahn was talking about BBBY increase with every ER that comes out that isn't BBBY.

5.1) We know that BBBY as a business aligns with IEPs goals almost perfectly, seeing as IEP wholly owns WestPoint Home, which is a manufacturer and supplier of textiles and home goods like towels, pillows, blankets etc. Something along the lines of a Vertical Merger between WestPoint Home would be incredibly beneficial for both BBBY and WestPoint, so by extension, IEP. (btw IEP is Icahn Enterprises)

THE ONE BELOW IS BIG

5.2) IEP made available 400 Million for future acquisitions on Nov 21st. The RC Icahn pic tweet was posted just 34 days beforehand on the 18th October. So Icahn Enterprises made the 400 mil available on the 21st November, go back to when I was talking about S-4s, the first S-4 that was made confidential was Dec 6th right? THAT'S JUST 15 DAYS AFTER IEP RAISES 400 MIL FOR FUTURE ACQUISITIONS! The timeline of RC Icahn Tweet, IEP makes available money for acquisitions and then the December S-4s being hidden all lines up literally perfectly. That is fact.

Spread the Word

We love Ryan Cohen and think he's the greatest Activist Investor of our generation. We are passionate followers of his moves and words and would love for others to know more about this great leader. We feel strongly that life is all about learning who to follow. If you have someone that needs more RC in their life, share Mother Squeezer with them!

Some of our Favorite Resources

Start Here

BBBY: Ben - Mr. Business

GME: Richard Newton

Computershared.net

For errors, omissions or if you have something to share? Let us know!

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.