Form 4: Fund 1 Investments, LLC Increases Stake in Tile Shop Holdings, Inc.

Fund 1 Investments, LLC, along with related entities, reports increased holdings in Tile Shop Holdings, Inc. through stock purchases and cash-settled total return swaps.

Summary

• Fund 1 Investments, LLC, Pleasant Lake Partners LLC, and PLP Funds Master Fund LP have filed a Form 4 detailing changes in their beneficial ownership of Tile Shop Holdings, Inc. (TTSH).
• The reporting entities acquired common stock in multiple transactions between April 16 and April 17, 2025, at prices ranging from $5.3638 to $5.4087 per share.
• These entities also entered into cash-settled total return swap arrangements, providing economic exposure to TTSH shares without direct ownership.
• The total number of common shares beneficially owned following the reported transactions is 11,781,826 held indirectly.
• The reporting persons disclaim beneficial ownership of the shares underlying the swap agreements except to the extent of their pecuniary interest.

Sentiment

Score: 6

Explanation: The sentiment is neutral. It reflects standard investment activity with no explicit positive or negative implications. The increased stake could be seen as a positive, but the disclaimer of beneficial ownership on swap shares tempers enthusiasm.

Positives

• Increased investment by Fund 1 Investments, LLC and related entities may signal confidence in Tile Shop Holdings, Inc.
• The use of cash-settled total return swaps allows for economic exposure without direct ownership responsibilities.

Negatives

• The reporting persons disclaim beneficial ownership of the shares underlying the swap agreements except to the extent of their pecuniary interest, which could limit their influence on company decisions.

Risks

• The value of the cash-settled total return swaps is dependent on the performance of Tile Shop Holdings, Inc.'s stock.
• Changes in the swap agreements could impact the economic exposure of the reporting entities.
• The expiration date of the swap agreements will be automatically extended for successive 12 month periods unless one party provides written notice to the other party, at least 30 calendar days prior to the first extension and at least 15 days prior to any subsequent extension, not to so extend the expiration date.

Future Outlook

The swap agreements will automatically extend for successive 12-month periods unless written notice is provided.

Industry Context

Form 4 filings are standard practice for reporting changes in beneficial ownership by company insiders and significant shareholders, providing transparency to the market.

Comparison to Industry Standards

• Comparable companies in the retail or investment space would also be subject to similar reporting requirements under Section 16(a) of the Securities Exchange Act of 1934.
• The use of cash-settled total return swaps is a relatively common strategy employed by investment funds to gain economic exposure to a stock without direct ownership, similar to strategies used by hedge funds and other institutional investors.

Stakeholder Impact

• Shareholders may view the increased stake as a positive signal.
• The impact on employees, customers, suppliers, and creditors is likely minimal based on this filing alone.

Key Dates

Keywords

Tile Shop Holdings, TTSH, Fund 1 Investments, Pleasant Lake Partners, PLP Funds Master Fund, Beneficial Ownership, Form 4, Cash-Settled Total Return Swap, Investment