Author Topic: Fairfax Announces Acquisition of Shares of Reitmans  (Read 14439 times)

sigis

  • Newbie
  • *
  • Posts: 20
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #10 on: December 22, 2013, 07:35:19 AM »
I looked at them 2 years ago when they seem to be very cheap on paper but didn't like their declining cash-flow. Things got much worse since then, so it really seems the stock is cheap for a good reason, hard to see where FFH sees value here.


beerbaron

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1430
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #11 on: December 22, 2013, 08:00:57 AM »
I looked at them 2 years ago when they seem to be very cheap on paper but didn't like their declining cash-flow. Things got much worse since then, so it really seems the stock is cheap for a good reason, hard to see where FFH sees value here.

I looked at them 2 years ago too and I found them really expensive... at the current price tough it's not a bad deal.

BeerBaron

KFRCanuk

  • Lifetime Member
  • Full Member
  • *****
  • Posts: 244
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #12 on: December 30, 2013, 04:37:45 PM »
The clothing retailer to older ladies, heavier women, and toddlers. 

There are lots of grannies and big girls out there.

ourkid8

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1052

petec

  • Hero Member
  • *****
  • Posts: 2447
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #14 on: August 07, 2019, 02:47:55 PM »
Good. Nice to see some evidence (if that’s what this is) of the portfolio review that seems to be going in, and some limited evidence that they’re willing to look failure in the eye and cut losers.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

Cigarbutt

  • Hero Member
  • *****
  • Posts: 2597
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #15 on: December 16, 2019, 12:14:57 PM »
There is another thread specific for Reitmans but there is the smell of blood and will take it from here.
https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ret-reitmans/msg273985/#msg273985

Long story short: Long story and very competent managers but retail is tough and all good things must come to an end.
Short-term problems are turning into intractable issues and I think that, given the present momentum, the turnaround will be very difficult.
This is a first shared shot at it and expect to potentially meet interesting entry points in the next few months.

3 scenarios:
1-They sell or turnaround the maternity segment and somehow save the brand; then market price should converge to book value.
2-They try and try and this becomes a value-trapped melting ice cube with accelerating negative cashflows (the transition from slow to fast may be short)
3-They decide to enter BIA, define a SISP pathway and rapidly liquidate through a receiver (the Danier Leather story)

For scenario 3, comparing Reitmans now to what Danier Leather looked like at the end of 2014 is instructive. There are balance sheet differences but IMO differences tend to cancel out in terms of the liquidation value. I assume Reitmans could terminate or assign leases in a similar way. I come to a liquidation value of +/- 1.40 per share if things go south in the next 6 months. I assume the liquidation and distributions would happen over a two-year period.

That's it for now and will reconsider with further developments or if/when share price goes below 0.70.

longlake95

  • Sr. Member
  • ****
  • Posts: 338
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #16 on: December 16, 2019, 02:32:28 PM »
More $$$ down a rat hole.

longlake95

  • Sr. Member
  • ****
  • Posts: 338
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #17 on: December 16, 2019, 02:35:15 PM »
My wife is my best unpaid retail analyst. If I had just more closely observed her shopping patterns, I'd be far wealthier. I'm learning. She hasn't set foot in Reitmans in 5 years. It's a goner.

Cigarbutt

  • Hero Member
  • *****
  • Posts: 2597
Re: Fairfax Announces Acquisition of Shares of Reitmans
« Reply #18 on: June 01, 2020, 05:42:31 PM »
The December 2019 post did not exactly trigger unbridled enthusiasm but there's been some action. With the superimposed virus wave, residual intrinsic value has been impaired and a fourth scenario needed to be defined: CCAA. They've just announced closure of the maternity segment and will liquidate related inventory (i assume this will be close to reported inventory value).
http://www.reitmanscanadalimited.com/news.aspx?AspxAutoDetectCookieSupport=1

The next step is financing and the natural move would involve a sale-leaseback transaction for the head office and distribution center (fair value well above reported book value).
The "safest" way to realize value would be to liquidate all inventory and go through BIA (effective way to deal with leases under the circumstances) but there is uncertainty about the duration related to the opening of stores enclosed in shopping malls and the management may have an emotional tie to the brand and its history.
The share trading has been suspended, for now.

Interesting fact: As part of the buyback in summer 2019, Fairfax sold its A shares (7.4M of them) at 3$ per share and then the share price declined by 97.5% when the trading was suspended 2 weeks ago.