Form 4: Fund 1 Investments, LLC Increases Economic Exposure to Tilly's Inc. Through Cash-Settled Total Return Swaps

Fund 1 Investments, LLC and related entities increased their economic exposure to Tilly's Inc. common stock through a series of cash-settled total return swap agreements.

Summary

• Fund 1 Investments, LLC, along with Pleasant Lake Partners LLC and PLP Funds Master Fund LP, have entered into cash-settled total return swap agreements with an unaffiliated third party.
• These swaps provide economic exposure to Tilly's, Inc. (TLYS) common stock without granting voting or disposition rights over the underlying shares.
• On February 5, 2025, swaps were entered into for 8,000 notional shares at a price of $4.0549 per share.
• On February 6, 2025, swaps were entered into for 10,000 notional shares at a price of $4.0245 per share.
• On February 7, 2025, swaps were entered into for 40,000 notional shares at a price of $4.233 per share.
• The total number of derivative securities beneficially owned following these transactions is 1,169,349.
• The swap agreements expire on December 27, 2027, but can be automatically extended for successive 12-month periods.

Sentiment

Score: 6

Explanation: The document describes financial transactions that are neither overwhelmingly positive nor negative. It reflects a strategic investment maneuver, but doesn't inherently signal significant risk or opportunity.

Future Outlook

The swap agreements will automatically extend for successive 12-month periods unless written notice is provided at least 30 calendar days prior to the first extension and at least 15 calendar days prior to any subsequent extension.

Industry Context

Hedge funds and investment firms commonly use total return swaps to gain economic exposure to a company's stock without directly owning the shares, allowing them to profit from price movements while avoiding certain regulatory requirements and voting rights.

Comparison to Industry Standards

• Total return swaps are a common tool used by hedge funds and other investment firms to gain exposure to assets without direct ownership.
• The specific terms of these swaps, such as the notional amount, pricing, and expiration dates, are negotiated between the parties and can vary widely depending on market conditions and the specific investment strategy.
• Comparable companies that may use similar strategies include other retail-focused investment firms and activist investors.

Stakeholder Impact

• The increased economic exposure to Tilly's Inc. may signal confidence in the company's future performance, potentially benefiting shareholders.
• The transactions do not directly impact employees, customers, suppliers, or creditors.

Key Dates

Keywords

Tilly's Inc., TLYS, Fund 1 Investments, Pleasant Lake Partners, PLP Funds Master Fund LP, cash-settled total return swap, economic exposure, beneficial ownership, Form 4, derivative securities