Rewind (Oklahoma)

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To be 100% clear, we have NO connection to the state of Oklahoma, whatsoever. None of us have even ever been there. But the state fascinates us because it was a clear-cut beneficiary of the fracking revolution and then a clear-cut victim - economically and, perhaps more controversially, environmentally - of the precipitous fall in oil prices that occurred a year+ ago. So, maybe this isn't "news" but Moody's Analytics says that Oklahoma - as well as Louisiana and North Dakota (notably, other oil-reliant states) - is among the least prepared states for a recession. Adding insult to injury, the state announced that it will be cutting outpatient mental health and substance abuse programs because of state budget cuts. Luckily there's no opioid addiction epidemic in the US these days. 

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...

News for the Week of 11/13/16

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  • Fast Forward: Bonanza Creek, Forbes Energy and Nuverra Environmental all face expirations of grace/forbearance periods this week. 
  • Fast Forward II: Dynergy and Illinois Power Generating Co. (Genco) launched an exchange offer for Genco with a prepackaged bankruptcy backstop; FirstEnergy bonds plummeted after acknowledging bankruptcy as an option for subsidiary, FirstEnergy Solutions.
  • Rewind I: Saudi Arabia. Feeling the pain.
  • Rewind II: Oklahoma. Two weeks ago we highlighted the effects of the oil and gas downturn on the educational system in Oklahoma. We acknowledged the environmental issues there too. Well, that story keeps evolving as a 5.0 earthquake roiled through Oklahoma this past week.  And this chart is interesting:
  • Chart of the Week: US field production of crude oil increased in 2015 for the 7th consecutive year to 9.42mm barrels/day, the highest crude oil production level since 1972. (Source: U.S. Energy Information Administration).

News for the Week of 11/06/16

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  • For-Profit Education - Despite a recent settlement with the government, for-profit educator DeVry University faces new headwinds. Also, another college closure.  
  • Fossil joins the ranks of retailers who will soon be taking restructuring charges and closing stores.
  • Healthcare/Pharma - many distressed investors and professionals are turning their attention away from E&P, OFS and retail are turning their attention here given the possibility that increased regulatory pressure may create more stress.
  • Lumber Liquidators continues to face legal scrutiny: is it a near-term bankruptcy candidate?
  • Municipal bankruptcy -  Populism converges on Scranton as a $500mm+ debt load triggers voter movement to put bankruptcy to vote.  
  • Payday Lenders are under siege.  
  • Private Equity - an assessment of its influence and future.  
  • Last Week: We noted the large AUM raises by Oakhill and Carlyle for deployment into the distressed market. In contrast, Fortress Investment Group underscores that prices are too rich and yields too low, and so they're prepared to return investor funds.
  • Last Week II: As "Dead Malls" continue to garner attention, a major mall owner talks up its own book and projects a major Aeropostale turnaround.
  • Last Week III: In the wake of increased seismic activity, Oklahoma and federal regulators order the closure of injection wells in Oklahoma. We noted this issue in last week's feature.  
  • Chart of the Week: