Author Topic: GME - Game Stop Corp  (Read 45355 times)

RadMan24

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Re: GME - Game Stop Corp
« Reply #160 on: March 29, 2020, 10:27:48 AM »
I went short the bonds at ~99 in the fall and have since covered to free up some liquidity. They outperformed my expectation of trading down to 82 cents (+~1400bps) which would've brought them in line with other stressed retail credits at the time, although I still think the bonds are worth around 50 cents in a restructuring

Did you thank the Corona virus?


thepupil

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Re: GME - Game Stop Corp
« Reply #161 on: March 29, 2020, 11:38:46 AM »
Coronavirus caused CDX HY to widen by from 275 bps to 630 bps but GME widened from 500-900 to 4800, indicative of the weakness of the business / confidence therein beyond the general market of dicey credit.

CCC’s from the one benchmark I can find appear to be down 23% whereas GME’s bonds are down more.

He can thank the coronavirus, but it would be more approproate to thank his security selection or at the very least sector selection ( I see some M bonds down more); also because these were so short in duration, the risk reward was excellent as tightening offered very little upside.
« Last Edit: March 29, 2020, 11:41:22 AM by thepupil »

stahleyp

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Re: GME - Game Stop Corp
« Reply #162 on: May 16, 2020, 03:57:33 AM »
How deep does Burry's research go? GME is his top listed position!


https://twitter.com/michaeljburry/status/1261356790219812864


Paul

kab60

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Re: GME - Game Stop Corp
« Reply #163 on: May 16, 2020, 10:40:22 AM »
I don't  understand why anyone would go long the equity. Secular decline plus fixed costs seems like such a sure zero. It reminds me of a very bad version of Outerwall (redbox and coinstar). There you had secular decline but also low fixed costs and an out in Coinstar, which was stable and both threw off a ton of cash. And even then lesson from that one was that when dealing with melting icecubes capital allocation and aligned interests is paramount (or just stay away from melting ice cubes unless it is something like Atlantic Power with contracted revenue).

johnny

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Re: GME - Game Stop Corp
« Reply #164 on: May 16, 2020, 11:19:46 AM »
How deep does Burry's research go? GME is his top listed position!


https://twitter.com/michaeljburry/status/1261356790219812864


boomer value investors excited that two different companies are going to be releasing new nintendos in the next year

roark33

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Re: GME - Game Stop Corp
« Reply #165 on: May 16, 2020, 11:48:17 AM »
he has actually sold some since the end of the quarter, filed a 13D/A.  I suspect he was playing for the epic short squeeze, which may just not have been that epic. 

Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #166 on: May 18, 2020, 05:59:42 AM »
he has actually sold some since the end of the quarter, filed a 13D/A.  I suspect he was playing for the epic short squeeze, which may just not have been that epic.

Yeah, his history with GME definitely isn't buy-and-hold, particularity recently. There have been two mini short squeezes since September or October of last year, with both being jump started by Burry's quasi-activist open letters to the board.
Former Teldar Paper Vice President

Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #167 on: June 09, 2020, 04:42:13 PM »
Q1 results out. No surprise that they are bad given the COVID situation

Check out the deterioration of shareholders' equity over TTM. Even setting aside goodwill writedowns, it has been brutal. I think they are letting inventory run off ahead of additional store closings. Cash balance is higher and inventory # is lower than I expected.

At some point in the relatively near future per store inventory is going to have to rise to support holiday shopping season and launch of new consoles. I expect more stores to close in coming months as management attempts to generate cash and shrink the biz down to a more sustainable size.

Speaking of stores closing, someone put this site together to track them. Gone but not forgotten!

http://gsclosing.blogspot.com/

35 locations suffered "extensive physical damage" in the recent American unrest. I am honestly a little shocked by how large that # is

Attempting to do an exchange offer for the senior notes

Former Teldar Paper Vice President

johnny

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Re: GME - Game Stop Corp
« Reply #168 on: June 09, 2020, 04:56:47 PM »
I am honestly a little shocked by how large that # is

unfathomable, considering how largely peaceful the protests have been, the tv tells me every day

5xEBITDA

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Re: GME - Game Stop Corp
« Reply #169 on: June 09, 2020, 05:26:08 PM »
Attempting to do an exchange offer for the senior notes

I'm thinking that the exchange offer is going to fail. For a current bondholder, what do you gain and in exchange for what? You get a new senior secured piece of paper at 10% with a 2023 maturity (+2 years). At a current price somewhere between 75 - 80 cents (this thing never trades, hard to tell what a real bid is) you are creating the exchanged piece of paper at a ~20% yield as compensation. You get a first lien collateral package including IP/trademarks and any properties (so distribution centers) and a second lien collateral package on A/R, inventory, etc. behind the ABL facility. Probably the more significant benefit is that the new bonds become structurally senior to operating leases which are currently pari with existing bonds. It sounds like quite a lot of security and a pretty good deal...but then ask, where will this Company be in two years and what will my exit be? To consent to the exchange is essentially a bet that the upcoming console cycle will turn the Company around and everything will be fine after that. Sounds like a lot of uncertainty. Bondholders hate uncertainty. I think bondholders actually have a better shot at preserving value by having this Company file bankruptcy sooner rather than later...the rest of this year is going to be especially brutal for them.

If I were a large bondholder (which I'm not) and I thought the console cycle turn will yield massive upside for the Company, I'd be more inclined to counter the Company's exchange offer with a debt for equity swap and ride the upside at a cheaper multiple that way. Unfortunately not going to happen this way.

I think that the exchange offer failing (or having very low participation) when they announce initial results on June 17th (correct date?) will result in the stock starting to price in real bankruptcy risk.

Edit: I live in NYC and can confirm the GameStop close to my place got busted up last week.