Form 4: Tile Shop Holdings Sees Significant Insider Buying and Swap Activity by Major Shareholder

Fund 1 Investments, a 10% owner and director of Tile Shop Holdings, Inc. (TTSH), has reported recent purchases of common stock and entry into cash-settled total return swap agreements, increasing its economic exposure to the company.

Summary

• Fund 1 Investments, LLC, along with 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.
• On June 20, 2025, the reporting persons acquired 1,060 shares of Common Stock at a price of $6.2572 per share.
• Following this transaction, the reporting persons beneficially own 11,856,805 shares of Common Stock indirectly through PLP Funds Master Fund LP and an additional 1,002,207 shares indirectly through an unaffiliated private fund, totaling 12,859,012 shares.
• On June 18, 2025, the reporting persons entered into a cash-settled total return swap arrangement for 14,170 notional shares of Common Stock at a price of $6.0518 per share.
• On June 23, 2025, an additional cash-settled total return swap arrangement was entered for 10,253 notional shares of Common Stock at a price of $6.2635 per share.
• These swap agreements provide economic exposure comparable to ownership but do not grant voting or disposition power over the underlying shares.
• The expiration date for the swap agreements is April 7, 2028, with automatic extensions for successive 12-month periods unless notice is provided.
• Following these swap transactions, the reporting persons beneficially own 821,860 and 832,113 notional shares, respectively, through these swap arrangements, totaling 1,653,973 notional shares.
• The reporting persons disclaim beneficial ownership of the shares reported except to the extent of their pecuniary interest therein.

Sentiment

Score: 8

Explanation: The document indicates strong positive sentiment due to significant insider buying and increased economic exposure by a major shareholder and director, suggesting confidence in the company's future.

Positives

• Significant insider buying of common stock by a 10% owner and director, indicating confidence in the company's future prospects.
• Increased economic exposure to Tile Shop Holdings through both direct share purchases and cash-settled total return swaps.
• The total return swaps allow for increased exposure without requiring direct ownership of voting shares, potentially indicating a strategic financial play.

Negatives

• The cash-settled total return swaps do not provide the reporting persons with voting power or the power to direct the disposition of the underlying shares, limiting their direct influence on corporate governance for those specific shares.

Risks

• The economic exposure through total return swaps is subject to market fluctuations of Tile Shop Holdings' common stock price.
• The reporting persons disclaim beneficial ownership of the shares underlying the swaps except to the extent of their pecuniary interest, meaning their influence is purely financial and not through direct control of shares.

Future Outlook

The cash-settled total return swap agreements have an initial expiration date of April 7, 2028, and are subject to automatic extensions for successive 12-month periods unless one party provides written notice not to extend. This indicates a long-term view on the economic exposure to Tile Shop Holdings' stock.

Management Comments

• The filing was signed by Benjamin C. Cable, Chief Operating Officer of Fund 1 Investments, LLC, on behalf of all reporting persons.

Industry Context

This Form 4 filing details insider transactions for Tile Shop Holdings, Inc., a company in the home improvement retail sector, specifically tiles. The transactions reflect a significant shareholder's increased confidence or strategic positioning within the company, which could be interpreted as a positive signal for the company's prospects within its industry.

Related Party Transactions

• The transactions involve Fund 1 Investments, LLC, Pleasant Lake Partners LLC, and PLP Funds Master Fund LP, all identified as a Director and 10% Owner of Tile Shop Holdings, Inc., making these related party transactions.

Stakeholder Impact

• Shareholders may view the increased insider ownership and economic exposure as a positive signal, potentially boosting investor confidence and the company's stock price.
• The company's management and board may interpret this as a vote of confidence from a significant investor.

Next Steps

• The cash-settled total return swap agreements will automatically extend for successive 12-month periods unless one party provides written notice not to extend (at least 30 calendar days prior to the first extension and 15 days prior to any subsequent extension).

Key Dates

Recommendation

Keywords

Tile Shop Holdings, TTSH, SEC Form 4, Insider Trading, Beneficial Ownership, Common Stock, Total Return Swap, Fund 1 Investments, Pleasant Lake Partners, PLP Funds Master Fund, Director, 10% Owner, Equity Securities