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Kohl's: Worth $75 Without Financial Engineering

  • Kohl's has activists wanting the company to spin off the e-commerce division to unlock value.
  • The company already has plans to grow the business and activists have yet to show how a full omni-channel business can operate as two different companies.
  • The stock is absurdly cheap at 7x EPS targets and Kohl's will repurchase over 15% of the outstanding shares this year.
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After an outstanding quarter with business booming, Kohl's (KSS) faces activists wanting to break up the business. The omni-channel retailer is facing the same pressure as other department stores to separate the e-commerce business in what amounts to financial engineering. My investment thesis remains very bullish on the retailer as the company reinvents the shopping experience.

Read the full article on Seeking Alpha. 

Disclosure: Long KSS. Please read the disclaimer page for more details. 

Update - Jan. 18

Kohl's still doesn't need financial engineering or activist looking for a quick buck.

-Acacia Research (NASDAQ:ACTG), which is backed by activist investor Starboard Value, is said to have contacted Kohl's Corp. (NYSE:KSS) about interest in a potential bid for the retailer. Kohl's shares jumped 6%.
-Acacia would likely be the lead investor with backing from Jeff Smith's Starboard Value, according to a Reuters report, which cited sources familiar.
-The report comes as Kohl's holder Macellum Advisors is pushing for changes including a sale, board changes. Macellum is a repeating a call for the company to make board changes or hire a bank to explore a potential sale.

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