Bed Bath & Beyond shares fall after investor Ryan Cohen reveals plans to sell his stake

Shares of Bed Bath & Beyond fell on Wednesday after activist investor Ryan Cohen said in a filing that he intended to sell his entire stake in the retailer through his company RC Ventures.

According a Form 144 that has been filed with the Securities and Exchange CommissionRC Ventures has offered to sell 9.45 million shares of the company, which is the total amount he holds in Bed Bath. A Form 144 acts as official notice of a proposed sale of securities.

The aggregate purchase price for the 7.78 million shares held directly by RC Ventures is approximately $119.4 million, excluding brokerage commissions, according to earlier SEC filings. And the aggregate purchase price for the company’s exercisable call options in 1.67 million shares held directly by RC Ventures is approximately $1.8 million, also excluding these commissions.

Call options give a buyer the right, but not the obligation, to buy stock at a set strike price. Cohen’s options were for strike prices of $60, $75 and $80.

If Cohen hypothetically managed to sell all of his Bed Bath common stock at Wednesday’s closing price of $23.08, he would earn about $60 million, according to a calculation by CNBC. Cohen’s hypothetical profits could be greater if he also sold the options contracts.

Cohen first revealed he had a nearly 10% stake in Bed Bath through his activist business in early March. FactSet says its holdings stood at 11.82% at the end of March.

At the time, Cohen, the chairman of GameStop and founder of Chewy, wrote a letter to Bed Bath CEO Mark Tritton saying he thought the homeware chain was struggling to reverse the decline. market share and overcome supply chain issues. He also urged the retailer to consider selling off its Buybuy Baby channel.

Later in March, Bed Bath said it had reached an agreement with the activist’s company to add three people chosen by Cohen to its board of directors, effective immediately.

Just three months later, Bed Bath abruptly replaced Tritton as CEO in June, naming restructuring expert and independent director Sue Gove as his interim successor. This came after the company suffered another quarter of sluggish sales and heavy losses.

A spokeswoman for Bed Bath said the retailer was “pleased to have entered into a constructive agreement with RC Ventures in March and is committed to maximizing value for all shareholders”.

“Specifically, we have worked quickly over the past few weeks with external financial advisors and lenders on strengthening our balance sheet,” she said in an emailed statement, adding that the retailer will provide more information in an update at the end of the month. .

A representative for RC Ventures did not immediately respond to CNBC’s request for comment.

More recently, Bed Bath has been struggling with cash flow, with its coffers drying up ahead of the holiday season and during the back-to-school and back-to-university sales periods.

Bed Bath reported about $108 million in cash and cash equivalents in its first fiscal quarter, up from $1.1 billion a year earlier. Its net losses swelled to $358 million from a loss of $51 million in the same period in 2021.

Still, the meme-stock craze has found new life in recent weeks, and Bed Bath has been the main beneficiary. As of Wednesday’s close, the stock had risen 58% so far this year, easily outpacing the broader market.

Shares of the home goods retailer rose more than 300% in August alone, with strong trading volume. The stock saw almost 400 million shares trade on Tuesday and another 249 million shares on Wednesday, according to FactSet.

Bed Bath was also by far the most mentioned stock on Reddit’s Wall Street Bets page over the past week, according to third-party data provider Quiver Quantitative.

On Wednesday, after news of Cohen’s filing began to surface, users took to the Wall Street Bets page to point out that Form 144 is only for giving an opinion on a proposed sale.

User “foyerhead” said: “Ryan Cohen didn’t sell. FORM 144 is the “right” to sell. It does not mean that you are selling or have sold. If you own 10% or more of a business, you must file the form giving you the right to sell within the next 90 days.”

User “DeadSol” wrote, “Of course he didn’t sell. He’s a monkey like us.”

Comments are closed.