RAD

Rite Aid Corp

Healthcare, Event Driven/Special Sit


Presented:03/23/2016
Price:$8.00
Cap:$8.46B
Current Price:$0.01
Cap:$0.00B

Presented

Date03/23/2016
Price$8.00
Market Cap$8.46B
Ent Value$15.45B
P/E Ratio4.23x
Book Value$0.48
Div Yield0%
Shares O/S1,057.28M
Ave Daily Vol12,336,218
Short Int3.31%

Current

Price$0.01
Market Cap$0.00B
Rite-Aid Corp. engages in the operation of retail drug stores. It sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The company was founded in September 1962 and is headquartered in Camp Hill, PA.

Publicly traded companies mentioned herein: CVS Health Corporation (CVS), Express Scripts Holding Company (ESRX), PharMerica Corporation (PMC), Rite Aid Corporation (RAD), Wal-Mart Stores Inc (WMT), Walgreens Boots Alliance (WBA)

Highlights

The presenter is short shares of Rite Aid (RAD) and sees the risk/ reward as favorable given the unique nature of the special situation. He sees the bearish positioning as a contrarian play on the Walgreens Boots/ Rite Aid deal being approved by the US Federal Trade Commission (FTC). With RAD shares trading at ~$8 and the bid from Walgreens at $9, the risk to the short position is effectively capped at $1, at most (12.5%). He sees it as unlikely that he would lose that much in the event of positive news being announced about the deal, as the stock would not immediately trade up to $9 and shorts could cover with a loss in the 8% - 9% range. On the other side, there could be as much as 35% downside risk for RAD stock if the deal is blocked or falls through for other reasons, in his opinion.

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Idea Discussion

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