Ambastha Financial LLC

By Kuldip K. Ambastha

In this past week, BJ Services LLC and Ascena Retail Group (ASNA) both announced their bankruptcies. BJ Services LLC provides its services to oil & gas companies focused on North American exploration & production, and is voluntarily filing for Chapter 11 bankruptcy. This company intends to sell its assets, and its cementing business is expected to remain a going concern. The company has a presence across both the USA and Canada, and is working with all stakeholders to try to minimize disruption to current client activities.

Ascena Retail Group (ASNA) is the owner of several well-known retail company brands (Ann Taylor, LOFT, Lou & Grey, Lane Bryant, Cacique, Catherines, and Justice), and also is voluntarily filing for Chapter 11 bankruptcy. This company has a plan to close many of its stores, while still being able to access cash, pay employee salaries, and provide employee benefits. All stores in Canada, Puerto Rico, and Mexico will be closed. A financial restructuring will happen over time. Due to the coronavirus pandemic disrupting normal business operations, both BJ Services LLC and Ascena Retail Group needed to declare bankruptcy.

Keywords – BJ Services LLC, oil & gas, exploration & production, cementing, Ascena Retail Group, ASNA, retail, Ann Taylor, LOFT, Lou & Grey, Lane Bryant, Cacique, Catherines, Justice, Chapter 11, bankruptcy, COVID-19, coronavirus, pandemic.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in BJ Services LLC and Ascena Retail Group (ASNA).

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

During this past week, RTW Retailwinds (RTW) and Sur La Table both declared bankruptcy. RTW Retailwinds owns several fashion brands focused on women (most prominently New York & Company), while Sur La Table specializes in kitchenware products. RTW Retailwinds has been hard-hit by the coronavirus pandemic, as has Sur La Table. RTW Retailwinds has already started liquidation sales, and it is expected that most (if not all) of its retail stores will be closed. The company’s online operations and intellectual property are also going to be sold off.

Sur La Table is well-known for its in-store cooking classes (now prohibited due to public health risks associated with the coronavirus), and is privately owned by Investcorp which is now looking for a new owner. Many Sur La Table store locations are being closed down. Due to the coronavirus pandemic, American consumers have lessened their demands for upscale kitchenware provided by Sur La Table. COVID-19 has now felled both RTW Retailwinds and Sur La Table.

Keywords – RTW Retailwinds, RTW, New York & Company, fashion, retail, Sur La Table, Investcorp, kitchenware, COVID-19, coronavirus, pandemic, bankruptcy, bankrupt.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in RTW Retailwinds (RTW) or Sur La Table. Since Sur La Table is privately held by Investcorp, it is not possible for the clients and principals of Ambastha Financial LLC to have positions in Sur La Table.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

Brooks Brothers is a famous American retailing company, and was founded in 1818. Over the years, it has been a clothier of presidents (in the USA, 40 out of 45 [89% of these] individuals), royals, financiers, war heroes, and many other such prominent people. On Wednesday, July 8, 2020, the company filed for Chapter 11 bankruptcy court protection from creditors, and is continuing its search (started in 2019) for a purchaser. Volatility due to the coronavirus pandemic has been problematic, and rent payments for brick-and-mortar locations have become severely burdensome. The company has decided to close about 51 stores already, and further store closures may happen depending on how the economy looks going forward plus any plans a new owner may have.

Keywords – Brooks Brothers, Claudio Del Vecchio, presidents, royals, financiers, war heroes, USA, American, retailer, retail, clothing, coronavirus, pandemic, COVID-19.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in Brooks Brothers. Since the company is privately owned by Claudio Del Vecchio, it is not possible for others to have positions in Brooks Brothers.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

Chesapeake Energy Corporation (CHK) of Oklahoma City, OK was in the news this week. The company was founded by Tom L. Ward (currently the Chairman and CEO of privately held MACH Resources) and the now-late Aubrey K. McClendon in 1989 with an initial funding of $50,000. Robert D. Lawler (aka: Doug Lawler) is currently the President and CEO of the company, plus a Director on the company’s Board of Directors. Chesapeake Energy became a pioneer in the natural gas exploration and production space, spending aggressively and borrowing heavily to grow the company over time. The company used hydraulic fracturing (aka: fracking) to unleash energy deposits which were previously economically unviable to take out of the ground’s shale rock.

On Sunday, June 28, 2020, the company filed for Chapter 11 bankruptcy due to a heavy debt load combined with a significant drop in oil and gas demand caused by the coronavirus pandemic. Chesapeake Energy has received $925 million in debtor-in-possession (DIP) financing, which will be used to fund operations as part of the Chapter 11 reorganization proceedings. As part of the reorganization, debt will be cut significantly, the balance sheet will be strengthened, and legacy contractual obligations will be potentially changed. During the trading week, the biggest daily return (from a loss percentage perspective) seen for the stock was -58.6% on Tuesday, June 30, 2020.

Keywords – Chesapeake Energy Corporation, Chesapeake Energy, Chesapeake, CHK, Oklahoma City, Oklahoma, OK, The Sooner State, State of Oklahoma, Tom L. Ward, MACH Resources, Aubrey K. McClendon, Robert D. Lawler, Doug Lawler, energy, oil & gas, natural gas, shale rock, Chapter 11, bankruptcy, reorganization, coronavirus, pandemic, COVID-19.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in CHK.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

The coronavirus pandemic is continuing to damage the private sector significantly. This week, GNC Holdings (GNC) and the parent company (CEC Entertainment) of Chuck E. Cheese plus Peter Piper Pizza both announced plans for bankruptcy. GNC Holdings will be using the bankruptcy process to close all of its health and nutrition stores eventually and sell itself completely. At first, GNC Holdings will be only closing a small number of stores, but likely all stores will be closed in the end as part of the sale process. CEC Entertainment is currently owned by a private equity firm (Apollo Global Management). CEC Entertainment owns the well-known Chuck E. Cheese, plus Peter Piper Pizza.

Due to the public health risks of the coronavirus, Chuck E. Cheese plus Peter Piper Pizza store locations have been mostly closed. CEC Entertainment will use the bankruptcy process to restructure, with a long-term focus of reopening eventually. CEC Entertainment has already obtained $130 million from lenders, to use as part of the restructuring process. A court-supervised sale process for CEC Entertainment will occur, with bidding to start at a price of $760 million. Due to the coronavirus plus the bankruptcy process, parents of young children will no longer be able to host their children’s birthday parties at the famous Chuck E. Cheese. This is the end of an era. The business toll of the coronavirus has been immense, alongside the much greater and more important human toll of the coronavirus.

Keywords – GNC Holdings, GNC, CEC Entertainment, CEC, Chuck E. Cheese, Peter Piper Pizza, Apollo Global Management, bankruptcy, bankrupt, legal, court, restructuring, restructure, coronavirus, pandemic, COVID-19.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in GNC. Since CEC Entertainment is privately held by Apollo Global Management at this time, it is not possible for the clients and principals of Ambastha Financial LLC to have any positions in CEC Entertainment.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

Biogen Inc. (BIIB) had a -7.5% return on Thursday, June 18, 2020. On this day, Biogen Inc. lost a legal dispute (over a patent) being heard by a U.S. district court. The patent dispute centered on a multiple sclerosis treatment drug called Tecfidera, which uses dimethyl fumarate as its main active ingredient. (In 2017, Biogen Inc. reached a legal settlement with a Danish company, such that Biogen Inc. could pay a fee to buy the license for the intellectual property around dimethyl fumarate.) The U.S. District Court for the Northern District of West Virginia found a lack of substantial written information about the patent. With a patent, Biogen Inc. would have been able to exclusively produce and sell Tecfidera through 2028. This is no longer possible, and thus many other companies may be able to provide generic equivalents of Tecfidera to consumers after getting the needed approvals. Another U.S. district court case on this matter is pending, in Delaware.

Keywords – Biogen Inc., BIIB, Tecfidera, dimethyl fumarate, multiple sclerosis, treatment, West Virginia, Delaware, patent, license, intellectual property.

Disclosure – The clients of Ambastha Financial LLC do not have any positions in BIIB. The principals of Ambastha Financial LLC do have a short option position in BIIB.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

The Dow Jones Industrial Average (DJIA) had a volatile ride this past week, due to several factors. Comments from Jerome Powell (the Chair of the U.S. Federal Reserve), GDP forecasting, unemployment rate (and jobless claims) data, and coronavirus pandemic data all played their own significant parts in the DJIA activity. The day of Thursday, June 11, 2020, is highlighted in the above table because the -6.9% return was the most extreme daily return for the trading week. At a press conference on Wednesday, June 10, 2020, Powell stated that financial conditions are improving, but Fed asset purchases will continue and interest rates will be held in the 0.00% – 0.25% range through at least 2022. His comments point to a gradual recovery for the American economy, with continued potential negative data in terms of real GDP contraction plus an elevated unemployment rate. In 2020, real GDP is expected to decline by 6.5%. At the end of 2020, the unemployment rate is likely to be 9.3%. However, in 2021, real GDP is expected to grow by 5.0% and the unemployment rate is expected to be 6.5%.

Significant inflation is not expected in 2020 and 2021. Unemployment claims for the past week were at 1.5 million, which is 355,000 less than the previous week. Continuing unemployment claims (where people have collected unemployment benefits for at least two consecutive weeks) were 20.9 million, which is 339,000 less than the previous week. Total unemployment claims have fallen for 10 straight weeks, but still the total is very high compared with historical norms. Under a new and temporary Pandemic Unemployment Assistance program from the federal government (for people ineligible to apply for traditional unemployment benefits), 705,676 claims were seen on top of what is noted previously. While the Department of Labor (DOL) has stated that 2.5 million jobs were quite unexpectedly added to the American economy in May 2020, the overall picture still looks quite bleak.

Furthermore, the coronavirus pandemic continues to be an issue affecting the capital markets. In the USA, there are now over 2.0 million total coronavirus cases present, with over 100,000 total deaths related to the coronavirus. States such as New York and California are still being hit hard by the coronavirus. A “second wave” of coronavirus-related deaths may or may not occur in the coming months within the USA as the American people attempt to get back to a “normal” or “new normal” way of living with various restrictions lifted. Given what is described here, the volatility in the DJIA for the past week was justified.

Keywords – U.S. Federal Reserve, Fed, Jerome Powell, coronavirus pandemic, COVID-19, unemployment, jobless claims, Pandemic Unemployment Assistance program, Dow Jones Industrial Average, Dow Jones, DJIA, interest rates, USA, America, American, economy, GDP, inflation, Department of Labor, DOL, New York, California.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

The airline sector caught our attention this week, due to strong returns seen by various companies. In this piece, American Airlines Group (AAL), Delta Air Lines (DAL), JetBlue Airways Corporation (JBLU), Southwest Airlines (LUV), and United Airlines Holdings (UAL) will be focused on. On Wednesday, June 3, 2020, Southwest Airlines delivered 5.6%. On Thursday, June 4, 2020, American Airlines Group delivered 41.1%, Delta Air Lines: 13.7%, JetBlue Airways Corporation: 15.5%, and United Airlines Holdings: 16.2%. Despite the public health issues still present due to the coronavirus pandemic, investors are speculating that demand for travel will rebound. Various airlines are seeing increased interest from travelers. Accordingly, these airlines are starting to add more flights to their schedules. If the summer travel season goes by without extensive damage from the coronavirus, it may be the case that airline companies have moved into a more sustainable footing for the long-term.

Keywords – American Airlines Group, AAL, Delta Air Lines, DAL, JetBlue Airways Corporation, JBLU, Southwest Airlines, LUV, United Airlines Holdings, UAL, airlines, airline, flying, flight, travel, coronavirus, pandemic.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in AAL, DAL, JBLU, LUV, and UAL.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

In this past week, Tuesday Morning Corporation (TUES), Hertz Global Holdings, Inc. (HTZ), and HP Inc. (HPQ) were all featured prominently in the news.

Tuesday Morning Corporation (TUES) is a retail business focused on the American home. Due to the coronavirus pandemic, the company was forced to close its stores for an extended period of time. Because of this fact, the company had to file for bankruptcy and plans to restructure its debts before re-emerging stronger in the fall of 2020. Tuesday Morning Corporation stock dropped by 13.8% on Tuesday, May 26, 2020, and closed the day at $0.25 / share.

Hertz Global Holdings, Inc. (HTZ) is a well-known car rental company which also has declared bankruptcy. In a period of social distancing and many canceled travel plans, car rentals have declined immensely across the USA. Carl Icahn was the largest shareholder in the company, and is rumored to have lost about $2 billion on his investment. Still, he is supportive of the company’s plan to use the bankruptcy process to restructure. Hertz Global Holdings, Inc. stock dropped by 80.5% on Tuesday, May 26, 2020, and closed the day at $0.55 / share.

HP Inc. (HPQ) has done well in the coronavirus pandemic era due to increased demand for work-from-home equipment such as laptop computers. However, the company has struggled with less demand for its printing business. HP Inc. stock dropped by 12.3% on Thursday, May 28, 2020, and closed the day at $15.01 / share after delivering a mixed earnings report and a lowered earnings guidance.

Keywords – Tuesday Morning Corporation, TUES, Hertz Global Holdings, Inc., HTZ, HP Inc., HPQ, COVID-19, coronavirus, pandemic, Chapter 11, bankruptcy, earnings, retail, car rentals, technology, tech, travel, work-from-home, Carl Icahn.

Disclosure – The clients and principals of Ambastha Financial LLC do not have any positions in TUES, HTZ, and HPQ.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

The American stock exchanges list a variety of companies from all over the world. Restrictions may be soon rolled out for Chinese (and other non-U.S.) companies listed on American stock exchanges, due to the Holding Foreign Companies Accountable (HFCA) Act already passed unanimously by the U.S. Senate on Wednesday, May 20, 2020. If the U.S. House also passes this legislation in the coming weeks and President Donald J. Trump signs it, non-U.S. companies would be required to have the Public Company Accounting Oversight Board oversee audits of corporate financial records before raising money (via stocks or bonds) in the American market. Furthermore, non-U.S. companies will have to adhere to the same investor protection rules which U.S. companies follow. Non-U.S. companies will also have to declare whether they are owned or controlled by a foreign government. All U.S. and most all non-U.S. companies already allow for this to happen, but Chinese companies do not.

Concerns around fraud (accompanied by a lack of transparency in general to start with) by Chinese companies have driven a push for this particular legislation. The fraud seen in the past from non-transparent Chinese companies has inspired this legislation which is driven by a need to extend more rigorous oversight onto Chinese companies. The most recent of these scandals involving Chinese companies has been that of the NASDAQ-listed Chinese company Luckin Coffee (LK) which fabricated its sales numbers.

It is unlikely that non-U.S. companies, seeing this pending legislation, will move to list on non-U.S. stock exchanges. London, Hong Kong, and other places have strong stock exchanges, but the U.S. stock exchanges overall (in aggregate) have the best size, liquidity, depth, trading volume, and so on. However, on Friday, May 22, 2020, the news of this legislation had some notable impacts such as Luckin Coffee (LK) stock dropping by more than 30% to $1.39 / share (having touched its 52-week low of $1.33 / share intra-day). Luckin Coffee (LK) has traded in the range of $1.33 to $51.38 / share in the past 52 weeks. Similarly, Alibaba Group Holdings Limited (BABA) shares dropped by 5.9% on Friday despite a strong earnings report. It was also reported on Thursday, May 21, 2020, that NASDAQ-listed Baidu Inc. (BIDU) is considering de-listing itself from the U.S. market in the wake of this legislation. Baidu (BIDU) shares dropped by 6.1% on Friday, May 22, 2020.

Keywords – American, Chinese, Holding Foreign Companies Accountable Act, HFCA, U.S. Senate, U.S. House, President Donald J. Trump, Public Company Accounting Oversight Board, auditing, investing, protecting, London, Hong Kong.

Disclosure – The clients of Ambastha Financial LLC do not have any positions in LK, BIDU, and BABA. The principals of Ambastha Financial LLC do not have any positions in LK and BABA, but do have stock and option positions in BIDU.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.