Today in Bulls - how the sausage is made
Regal is as regal does
Fascinating article on Livewire - illuminating as much for what is doesn’t address for what it does. It’s almost as if this has been the chosen vehicle for Regal to respond to the questions raised in these pixels - but more on that later.
Calling the street but not the source
Unfortunately, I was unable to respond because the author didn’t contact me despite a link in the article to these very pixels. I’m reliably informed that the author did call most of the street except the primary antagonist. Make of that what you will.
In the bull case section of the article, it’s easy to dismiss the Wilson Asset Management quotes as “we like number go up” but “position small” idiocy, and what else would you expect from them.
Finding a straw man
It’s no surprise no one was willing to put their name to the bear case raised in the article, presumable because it’s so piss-weak. ESG rating? I mean really. It’s hard not to find oneself in agreement with Regal when they deftly swat it away.
Avoiding the questions
Whilst I’m going to address the points Regal raise in their response to the straw man - it’s worth reiterating some important facts that Cettire has never addressed.
The questions
Why was the value on the order we made to Texas underquoted and duties not paid?
Why was no sales tax charged on our order?
Why was no sales tax charged on baskets to California?
Why was no Cettire entity registered for sales tax in California?
Why was Cettire not in good standing in Texas when we made the order?
Were duties paid on the AFR’s specific order?
Have USA sales taxes been paid continually and in the correct amount since the company floated in 2020?
Have duties been paid correctly and continuously since the company floated in 2020?
There’s more but hopefully the point is made.
Simplistically correct
The article pointed out that there’s an exemption in NJ and PA for clothing and this had been excluded from the analysis of sales taxes I had raised here - this is absolutely true and an omission on our part.
So presumably if this was such a gotcha then we should have been provided with an alternative analysis showing just how wrong we were and showing how it aligned with the 6.3% the company actually paid? Well - no. The bulls aren’t held to the same standard as the bears - and had we been provided with a right of reply then we would have had the chance to point this out.
Realistically wrong
This exemption applies only to clothing and footwear and not to accessories like handbags or belts. But even if we set the tax to zero in the place where this exemption occurs, we still end up with an expected tax rate of 7% - we’re still way out from the amount Cettire actually paid, and it’s hard to conclude other than that whoever fed this to Regal knew this and pushed the line anyway.
Who owns Cettire? Who is the marginal buyer?
After the founder who owns 30%, Regal own over 14% and Cat Rock own over 10%. This leaves around 45% of the company to fight over. WAM have said it’s a small holding and LHC have claimed in their last quarterly to have sold out entirely.
This means that realistically there are no buyers for either Regal or Cat Rock’s stakes in size - so they are pretty much wedded to their positions. In the absence of the company being added to an index which would force passive investors - and super funds - to own the company then there’s no realistic way for these major holders to sell down. So who sets the price?
The marginal buyer or seller is…. maybe reading livewire? Either way - incredibly smart media management from Regal - chapeau!