August 19, 2019 - 9:21pm EST by
2019 2020
Price: 16.69 EPS 0 0
Shares Out. (in M): 53 P/E 0 0
Market Cap (in $M): 885 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT 0 0

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Most of you will know Revlon so I will not expand much on the business. What is more interesting at this time is that we have a confluence of two potential catalysts. A. It looks like the balance between available shares and short interest is pretty dicey and B. Perelman has just given notice that he is looking at a strategic transaction and Goldman has been hired. I read this that a sale might be possible.

So to first get to the “shortage of shares”. Look at the table below.


Revlon Share Data

Number of Shares


REV outstanding Q2 2019









Alberta Investment Management Corp



Index Funds






Outstanding - Sum Long Holders



Shares Short




On first sight it looks like the available float is 6.812 million shares of REV and we have 2.362 million shares short. But if one looks closer, the actual float is a lot smaller. Mittleman has been long Revlon for some time now and they continue to declare the shares are worth $40 plus. It is my guess that they aren’t interested in selling at $16 a share. The Alberta Investment Management Corp has been buying stock in this range too. I agree that their commitment to owning Revlon is not as well known, but still since they have been buying at prices higher than today’s I would venture to guess they want a higher price too. Then there are the index funds which in my conservative estimate hold 1.166 million shares. 

That gets me an available float of 2.055 million shares, while currently we have a short interest of 2.362 million shares. There are currently long investors that believe they own 4.417 million shares, while the true available float is only 2.055 million shares. In short, it will not take much for the REV stock price to go up when those short REV decide they have to cover. Or to say it differently, those holding the 2.362 million shares short will have to convince those holding 4.417 million shares long to shrink the “fake float” of 4.417 million back to 2.055 million shares. That could be quite the short squeeze. But what if the shorts decide there is no need to cover? ­ Well that is where Perelman’s recent 13D/A filing is interesting. In it he declares he is looking for a strategic transaction involving Revlon. Supposedly they hired Goldman. I am not saying this is guaranteed to result in a sale of Revlon? But with the above mentioned share numbers … would you risk being/staying short Revlon?

I will agree that Revlon, like any other consumer business in the age of Amazon is struggling, but to a buyer Revlon would provide a nice portfolio of brands that could be deliver a decent amount of back office synergies.

Lastly there is always the 90% issue, where Perelman buys more than 90% of the company and does a bid. As far as I understand, this will require a majority of the minority to agree to such a transaction. Also don’t forget that Perelman would have to buy an additional 1.508 million shares to get there. It doesn’t seem to me that those shares will be easily available given the above mentioned dynamics.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


A. Short squeeze

B. Potential sales

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