Form 4: Insider Group Boosts Economic Exposure to Tile Shop Holdings Via Swaps

Fund 1 Investments, LLC and related entities have increased their economic exposure to Tile Shop Holdings, Inc. through new cash-settled total return swap agreements.

Summary

• Fund 1 Investments, LLC, Pleasant Lake Partners LLC, and PLP Funds Master Fund LP, identified as a Director and 10% Owner of Tile Shop Holdings, Inc. (TTSH), filed a Form 4.
• The reporting persons collectively hold 11,856,805 shares of Common Stock indirectly for the account of PLP Funds Master Fund LP.
• An additional 1,002,207 shares of Common Stock are held indirectly for an unaffiliated private fund advised by Pleasant Lake Partners LLC.
• A cash-settled total return swap arrangement was entered into on July 18, 2025, providing economic exposure to 20,000 notional shares of common stock at a price of $6.9225 per share.
• Another cash-settled total return swap arrangement was entered into on July 21, 2025, providing economic exposure to 15,000 notional shares of common stock at a price of $6.7003 per share.
• These swap agreements provide economic results comparable to ownership but do not grant the reporting persons voting or disposition power over the underlying shares.
• The reporting persons disclaim beneficial ownership of the underlying shares of the swaps except to the extent of their pecuniary interest.

Sentiment

Score: 6

Explanation: The filing indicates an increased economic interest by a significant insider group, which can be viewed positively as a sign of confidence. However, the use of swaps means they don't have voting control over these specific shares, which is a neutral aspect. Overall, slightly positive due to the increased exposure.

Positives

• Increased economic exposure by a significant 10% owner and director group, potentially signaling confidence in the company's future performance.
• The use of cash-settled total return swaps allows for economic exposure without direct ownership, which can be a flexible investment strategy.

Negatives

• The reporting persons do not have voting or disposition power over the shares underlying the swap agreements, limiting their direct influence on corporate governance for these specific notional shares.

Risks

• The reporting persons disclaim beneficial ownership of the underlying shares of the swap agreements, except for their pecuniary interest, which means their direct control over these shares is limited.
• The value of the total return swaps is tied to the performance of Tile Shop Holdings, Inc. common stock, exposing the reporting persons to market price fluctuations.

Future Outlook

The cash-settled total return swap agreements have an expiration date of April 7, 2028, and will automatically extend for successive 12-month periods unless one party provides written notice not to extend.

Management Comments

• Securities reported herein are held for the benefit of PLP Funds Master Fund LP (the 'PL Fund') and an additional private investment vehicle for which Pleasant Lake Partners LLC ('PLP') serves as investment adviser.
• Fund 1 Investments, LLC serves as managing member of PLP. Jonathan Lennon serves as managing member of Fund 1 Investments, LLC.
• Each of the Reporting Persons disclaims beneficial ownership of the shares reported herein except to the extent of its or his pecuniary interest therein.
• The swap agreements provide the Reporting Persons with economic results that are comparable to the economic results of ownership but do not provide the Reporting Persons with the power to vote or direct the voting or dispose of or direct the disposition of the shares of common stock that are the subject of the swap agreements.

Industry Context

This filing indicates a significant insider group's continued and increased interest in Tile Shop Holdings, Inc., utilizing derivative instruments to gain economic exposure. Such strategies are common among sophisticated investors seeking to manage capital efficiency or specific risk profiles within their portfolios.

Related Party Transactions

• Fund 1 Investments, LLC serves as managing member of Pleasant Lake Partners LLC.
• Pleasant Lake Partners LLC serves as investment adviser to PLP Funds Master Fund LP.
• The reporting persons are related entities acting in concert as a 10% owner and director group.

Stakeholder Impact

• Shareholders: Increased economic alignment of a significant insider group with the company's performance, potentially signaling confidence. However, the lack of voting power for the swap-related shares means no change in voting control from these specific transactions.

Next Steps

• Automatic extension of cash-settled total return swap agreements for successive 12-month periods unless notice is given.

Key Dates

Keywords

Tile Shop Holdings, TTSH, SEC Form 4, Beneficial Ownership, Total Return Swap, Insider Trading, Equity Securities, Investment Fund, Director Ownership, 10% Owner