Notable (Goldman Sachs, Intelsat, Linn Energy & Goodwill Stores)

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Goldman Sachs. Everyone loves to hate on them. Oh, and Venezuela ($GS). Pssst: there are several others in the trade too.

Intelsat ($I). There goes that Softbank thing. The merger didn't get enough creditor support. 

Linn Energy. The recently restructured company offloaded its Jonah and Pinedale fields and surrounding area to Jonah Energy, a platform formed by TPG Capital. For $580mm. 

Lunch. Short it. And the casual dining spots that serve it, e.g., Ruby Tuesday Inc. ($RT)

Ocwen Financial. Nothing like the "Strippers Defense" to ward off scrutiny ($OCN).

Retail. File this one under unintended consequences. It appears that Goodwill - yes, that Goodwill - is also falling victim to online shopping and is committed to downsizing its brick-and-mortar footprint and restructuring some operations. Someone on this newsletter should think about this as a potential pro bono project.

Interesting Restructuring News

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  • Financial Services. Ocwen Financial Corp. got pummeled this week with fresh allegations.
  • Pharma/Hedge Fund Hotels. We enjoyed this summary of Bill Ackman's involvement in Valeant. And this piece discussing Marc Cohodes' short-strategy vis-a-vis Concordia International.
  • Fast Forward. With Agent Provocateur (amusing write-up below, if we do say so ourselves) going bankrupt and L Brands (Victoria's Secret) reporting dogsh*t numbers last quarter, we figured we'd look at the lingerie space for a hot second and we found a lot of action. And it ain't good for the incumbents. It'll be interesting to see if Aerie's omnichannel strategy pays off - bold move to double down on physical stores these days - when Amazon looms right around the corner.
  • Rewind I: Groupon. As we foreshadowed might happen, Groupon dropped this bomb on Good Friday while markets were closed - a banal and cynical PR trick to try and avoid a bad news cycle. 
  • Rewind II: Sun Capital Partners. We have been beating up on Sun Capital Partners as its retail portfolio just gets uglier and uglier (see now Marsh Supermarkets, which has apparently hired Hilco to explore strategic options, and Vince, which got itself a recent downgrade). Perhaps CVC Capital Partners and Leonard Green & Partners have gotten the memo; the two PE firms appear to be exploring a sale of BJ's Wholesale Club which, in turn, probably means that any plans of an IPO are on hold. 

News for the Week of 3/5/17

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  • Coal. Post-reorg players like Arch Coal are now trying to take advantage ofgovernment subsidy (which reeks of buyside "value-realization"): query what this means for alternative energy players who already receive such subsidies and are rumored to be under siege by the Trump administration...?
  • Environment. We wrote a few months ago about Oklahoma and the apparent correlation between wastewater disposal and an uptick in seismic activity. The seismic-hazard warning for Oklahoma in 2017 is "still significantly elevated."
  • Golf & Sexy Time. There's zero correlation: we just thought it was a funny combination. That said, tough times for TaylorMade (owned by Adidas and apparently being shopped by Guggenheim Securities). Meanwhile, Agent Provocateur sold while in UK "administration" to an affiliate of Sports Direct (which also recently surfaced as the stalking horse bidder in Eastern Outfitters). AlixPartners was the administrator.
  • Legal Profession. Short big firm junior lawyers.
  • Power. This is an odd report on Westinghouse. 
  • Retail. We're getting a little sick of sounding like a broken record but Best Buy and Target reported numbers this past week and then saw massive stock drops due to weak guidance. And Barnes & Noble got DECIMATED after reporting numbers. The good news is that the coloring fad appears to be over. Meanwhile, the tech barrage shows no signs of abating: GameStop came under pressure this week after Microsoft announced its subscription gaming service. Is GameStop an immediate near term restructuring candidate? No, but part of the value we provide is highlighting for you where future pain points are hiding and without sounding TOO dramatic, this could be the beginning of the end.
  • Retail II. We're nerds and so we found this analysis of when to close retail stores interesting. And we're curious to know if any of our advisory readers agree with this...LET US KNOW. Speaking of closing retail stores, Abercrombie will close 60 stores, Crocs will close 160 stores, and looming bankruptcy candidate hhgregg is closing 88 stores (which briefly sent Best Buy's stock north back up, despite earnings). Meanwhile, Neiman Marcus hired Lazard for balance sheet help and Radio Shack 2.0 (aka General Wireless Operations) is rumored to be Radio Shack chapter 22.0.  
  • Tech. Rough week for Uber. Choice quote: "Before too long, Uber's cash will run out. And if Uber hasn't built a viable self-driving car by then, the results won't be pretty."
  • Telecom. Wow, Intelsat, bailed out? 
  • Fast Forward: Seadrill Ltd. noted the possibility of a bankruptcy filing, sending the stock into a tizzy. Still, John Fredriksen quickly highlighted his history of no default. Related, Pacific Drilling also noted in its earnings call that Chapter 11 is possible. 
  • Rewind I: A lot of folks have been sleeping on tech bankruptcies, but NJOY was a hardware bankruptcy from last year that now has a resolution: Mudrick Capital seeks to turn the company around, operating it like a PE-owned company rather than a VC-funded company. Speaking of which, Cirque du Soleil got a workover by TPG Capital (and AlixPartners) and now there's this YouTube promotional video to show for it. Speaking of purchases out of bankruptcy, it seems a Canadian retail player made the first move on Wet Seal only to be outflanked by Gordon Brothers.
  • Rewind II: Soundcloud looks increasingly like it will be in the busted tech bankruptcy bucket. IP sale?
  • Chart of the Week: 
  • Tweet of the Week: This is great because it doubles as a second chart of the week: we're so creative. Anyway, we hate to say we told you so but, effectively,we told you so: we'd love to know why nearly 200 companies felt the need to reference AI in their earnings reports...