![]() ![]() Ĭlearly size is not a limiting factor with infinity squeezes. Hedge funds suffered estimated losses of as much as €30 billion that week, while Porsche reportedly made a profit of €6 billion. When Porsche suddenly upped its stake without prior notice, shares of VW quickly rose by a stunning 5x (more than 400%) within days, making it (briefly) the world's most valuable company by market cap at €300 billion. The most famous example of an infinity squeeze was that of Volkswagen AG ( VLKAY ) in 2008. In the section that follows, I include Bloomberg screenshots and additional links to SEC filings so that readers can do their own math.ĭillard's now appears perfectly set up for an " infinity squeeze " which could be triggered at any time. *** Investment thesis - set up for "Infinity Squeeze"įor those in a rush, I briefly summarize my thesis here. It is a mathematical trade based on the short interest exceeding the effective float.īelow we will see how the short interest somehow became the highest in the retail space. In any event, the numbers above arguably make Dillard's a better long pick than Macy's ( M ), Target ( TGT ) or Kohl's ( KSS ).īut again, this is not a thesis about the fundamentals at Dillard's. This thesis is about the math that says there are millions more shares short than are in the effective float. There is effectively zero visible bankruptcy risk for Dillard's and significant incentive for the company to go private.Īgain, I am not really focused on the fundamentals at Dillard's. Even with a generous haircut to those numbers, Dillard's is still trading at a discount to its real estate value. Market value of Dillard's real estate has been estimated at $3-4 billion. However, book value only values assets at historical cost, which is decades out of date. Dillard's is trading at just over book value. Online shopping from places like Amazon ( AMZN ) is replacing "brick and mortar" shopping at places like Wal-Mart ( WMT ).īut unlike many of the other department stores, Dillard's has strong free cash flow and little debt. ![]() ![]() But it is important to at least differentiate Dillard's from the financially shaky players like Sears ( SHLD ) or J.C. I am less focused on the fundamentals at Dillard's. ![]()
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