Dmitriy Kozin 🇺🇲🛢️⚓

History doesn't repeat, but it often rhymes. Yield on $XRX 2028 5.5% Bonds is 44%. There's ~$750M left of those bonds. Xerox reported $500M+ in Cash on hand for Q2 (They've consistently maintained $500M in Cash quarter to quarter) and reaffirmed their forecast of $400M+ in FCF for the next 2 quarters. - The market is pricing Xerox's 2028 debt at junk levels, i.e. it is priced as if there is a high likelihood of Bankruptcy - Xerox has already bought back $194M par of 2028 debt this year for just ~$90M - Xerox has enough cash on hand + expected FCF in the next 2 quarters to pay off 2028 debt + Warrants - If there are arbitrageurs, they are staying in the trade - short interest has only risen while equity has risen in price - Gains on selling CDS / Buying Bonds / shorting stock are capped - Losses on shorted stock are potentially infinite - Picking up pennies in front of a steamroller works until it doesn't...and then you get steamrolled Shoutout @dmiko789 for this theory back in 2020 about GME - it happens in many other scenarios (although not as extreme as GME, which is likely to never be replicated again)