Form 4: Fund 1 Investments, LLC and Affiliates Increase Economic Exposure to Tilly's, Inc. Through Cash-Settled Swaps

Fund 1 Investments, LLC and related entities have increased their economic exposure to Tilly's, Inc. through cash-settled total return swap agreements, without gaining voting rights over the underlying shares.

Summary

• Fund 1 Investments, LLC, along with Pleasant Lake Partners LLC and PLP Funds Master Fund LP, have reported changes in their beneficial ownership of Tilly's, Inc. stock.
• These changes are due to the execution of cash-settled total return swap agreements with an unaffiliated third party.
• The agreements provide economic exposure to 10,860 shares at $4.3257 per share on January 30, 2025, and 55,000 shares at $4.3465 per share on January 31, 2025.
• The total number of shares the reporting persons have economic exposure to is 1,111,349.
• These swaps do not grant the reporting persons voting rights or direct control over the disposition of the underlying shares.
• The reporting persons disclaim beneficial ownership of the shares except for their pecuniary interest.

Sentiment

Score: 6

Explanation: The document is a neutral filing of a change in beneficial ownership. The use of swaps is neither positive nor negative in itself, but indicates a continued interest in the company.

Positives

• The increased economic exposure suggests a continued interest in Tilly's, Inc. by Fund 1 Investments, LLC and related entities.

Risks

• The use of cash-settled swaps means the reporting persons do not directly own the shares, which could impact their influence on the company.
• The economic exposure is subject to the terms of the swap agreements, which could change over time.

Industry Context

The use of cash-settled swaps is a common strategy for investors to gain economic exposure to a company's stock without directly owning the shares. This allows for flexibility and can be used for various investment strategies.

Comparison to Industry Standards

• Cash-settled total return swaps are a common financial instrument used by investment funds to gain exposure to equity markets without direct ownership.
• Similar strategies are employed by hedge funds and other institutional investors to manage risk and leverage their positions.
• The specific terms of the swap agreements, such as the extension clauses, are typical in these types of contracts.

Stakeholder Impact

• The increased economic exposure could be viewed positively by shareholders as it indicates continued interest from a significant investor.
• The lack of direct ownership and voting rights may be a concern for some stakeholders.

Key Dates

Keywords

cash-settled swaps, Tilly's Inc, economic exposure, beneficial ownership, Fund 1 Investments, Pleasant Lake Partners, PLP Funds Master Fund LP, derivative securities