Hartford Connecticut is F*cked and Houston/Dallas Are Dealing

in

Hartford officials are turning over rocks looking for loose change at this point as they try and plug a projected $40mm budget shortfall. Anyone know which law firm they've hired for the inevitable Chapter 9? If so, email us! Speaking of bad municipal situations, it looks like Dallas and Houston will get a temporary reprieve financed on the back of pensioners. At least there is some sensibility being baked into "return" assumptions. We bet the numbers will still be way off. They always are. 

News for the Week of 01/22/17

in
  • Distressed Investing. A short discussion of opportunities in post-reorg equities.
  • Fraud. With lofty valuations and lofty P/E ratios come lofty expectations. And fraud. Here's hoping this is confined only to tech. 
  • Hospitals. They're going away.
  • Malls. Simon Properties and General Growth Properties take a hit from The Limited Brands bankruptcy, which is only valuable on an IP basis. But don't worry: pop-up stores and pickup centers will ease the pain. Wait, what?
  • Mexico. Pemex is selling a baseball field to sure up liquidity. Yes, you read that right.
  • Retail & Retail Analytics. Some analytics around retail. Meanwhile, in the face of talk about renewed IPO activity in '17, Claire's Stores unsurprisingly abandoned its IPO, further calling into question Apollo's $3b take-private transaction. And then there's BCBG trainwreck. But hope is not lost for physical retail: a number of e-commerce retailers are increasing their physical presence, including Bonobos, Rent the Runway and others.
  • Rewind I: More on the Dallas pension fiasco.
  • Rewind II: New developments with Takata pummel the stock.
  • Chart of the Week: 

News for the Week of 12/11/16

in
  • Argentina. Lawyers get credit for a break in the 15-year impasse.  
  • Distressed Legal Debt. Wait, say what? Anchorage Capital purchased Citi's debt in law firm Slater & Gordon for $0.38/on-the-dollar. 
  • Solar & Wind. In the wake of La Paloma Generating and Illinois Power Generating Company (Genco) both filing for bankruptcy (see below), solar seems to be gaining momentum with measurable progress in Florida and California (San Diego). But not just solar: this week Google announced that its reducing its carbon footprint with direct purchases of renewable (wind) energy. See Chart of the Week II below.
  • Fast Forward: UnderArmour announced this week that, starting in 2020, it has exclusive rights to produce Major League Baseball's uniforms. While this is a way off and numbers for MLB fanhood may be even weaker than today, this is a big deal for them and a major loss for Majestic Athletic. Cause and effect: we're wondering what this will mean for Majestic's business go-forward...
  • Rewind I: Dead Malls. People can't seem to talk about this enough: here, some ways to invest it.
  • Rewind II: Dallas. We previously mentioned the pension issues there and talk of Chapter 9. This week Moody's released a report highlighting that Texas' four largest cities have a combined $22.6 billion in underfunded pension liabilities. Yikes.
  • Rewind III: Last week we noted the injunction in place delaying, for now, a mandated overtime pay rule that is thought to endanger retail profits further. Some companies have decided to implement the change preemptively. 
  • Chart of the Week: When viewed in tandem with last week's chart about peak oil, the rise of battery-powered cars is marked.  

Renewable energy use...this is changing rapidly:

News for the Week of 11/27/16

in
  • Avaya. The long-rumored and awaited Chapter 11 filing may be imminent.
  • Buzzfeed. Buzzfeed acqui-hired Ben Kaufman, former high-flying CEO of the bankrupted Quirky to try and crack the elusive e-commerce nut. 
  • Dallas. Police and firefighter pensions threaten to push the growing city into municipal bankruptcy.
  • Payless Shoes. Australian operations may prove to be a leading indicator for what's to come in the U.S. Meanwhile, as retailers fall into bankruptcy left and right, once-bankrupt Circuit City is scratching and clawing to a (potential) re-emergence. While American Apparel got pantsed last week, it seems that Abercrombie is getting closer to losing its shirt (#dadjoke?).
  • Sun Capital. Fresh on the heals of the Garden Fresh bankruptcy, it looks like another portfolio company is on the verge of a restructuring as The Limited Stores - with a not-so-limited 243 locations - has hired Guggenheim Partners to explore strategic alternatives. Other accounts indicate that this may be an IP asset sale in the vein of American Apparel. 
  • Rewind: Coal. Last week we highlighted the contradiction between what is happening in the coal industry and what President-Elect Trump says will happen. In another blow to coal, generally, Canada announced this week that intends to fully phase out coal by 2030.
  • Chart of the Week: