Shares of Bed Bath & Beyond fell in extended trading on Wednesday after activist investor Ryan Cohen said in a filing that he intends to sell his entire stake in the retailer through his firm RC Ventures.
Seconds a Form 144 that was filed with the Securities and Exchange CommissionRC Ventures proposed to sell 9.45 million shares of the company, which is the total amount contained in Bed Bath. A Form 144 acts as an official notice of a proposed security sale.
The total purchase price for the 7.78 million shares directly owned by RC Ventures is approximately $119.4 million, excluding brokerage fees, according to previous SEC filings. And the aggregate purchase price of the company’s call options exercisable on 1.67 million shares directly owned by RC Ventures is about $1.8 million, also excluding those fees.
Call options give the buyer the right, but not the obligation, to buy shares at a set strike price. Cohen’s options had strike prices of $60, $75, and $80.
If Cohen could hypothetically sell all of his Bed Bath common stock at Wednesday’s closing price of $23.08, he would net about $60 million, according to a CNBC calculation. Cohen’s hypothetical gains could be higher if he also sold the options contracts.
Cohen first disclosed that he held a nearly 10% stake in Bed Bath through his activist firm in early March. FactSet says its holdings stood at 11.82% at the end of March.
At the time, Cohen, GameStop’s chairman and founder of Chewy, wrote a letter to then-Bed Bath CEO Mark Tritton saying he believed the home goods chain was struggling to reverse declining market share and navigate supply chain issues. He also urged the retailer to consider selling its Buybuy Baby chain.
Later in March, Bed Bath said it reached an agreement with the activist’s company to add three people picked by Cohen to its board of directors, effective immediately.
Just three months later, Bed Bath abruptly replaced Tritton as chief executive in June, appointing restructuring expert and independent director Sue Gove as her interim successor. This came after the company suffered another quarter of sluggish sales and heavy losses.
A spokeswoman for Bed Bath said the retailer is “delighted to have reached a constructive agreement with RC Ventures in March and is committed to maximizing value for all shareholders.”
“Specifically, we have been working rapidly in recent weeks with external financial advisors and lenders to strengthen our balance sheet,” it said in an emailed statement, adding that the retailer will provide more information in an update later this month. .
A representative for RC Ventures did not immediately respond to CNBC’s request for comment.
More recently, Bed Bath has faced liquidity problems, with its coffers drying up before the holiday season and during the back-to-school and back-to-college sales periods.
Bed Bath reported approximately $108 million in cash and cash equivalents in its fiscal first quarter, down from $1.1 billion a year earlier. Its net losses widened to $358 million from a loss of $51 million in the same period in 2021.
Still, the meme craze has found new life in recent weeks, and Bed Bath has been the main beneficiary. At Wednesday’s close, the stock was up 58% so far this year, handily outperforming the broader market.
Shares in the home goods retailer have surged more than 300% in August alone on heavy trading volume. The stock traded close to 400 million shares on Tuesday and another 249 million shares on Wednesday, according to FactSet.
Bed Bath has also been 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 emerge, users took to the Wall Street Bets page to point out that the Form 144 is only intended to notify a proposed sale.
User “foyerhead” said: “Ryan Cohen did not sell. FORM 144 is the ‘right’ to sell. It does not mean you are selling or have sold. If you own 10% or more of a company, you have to submit the form that gives you the right to sell in the next 90 days.”
User “DeadSol” wrote: “Of course he didn’t sell. He’s a monkey like us.”