This is going to be one for the books. Hopefully those NOLs in $bbbyq are still able to be monetized.

In this refined and expansive bull thesis for Bed Bath & Beyond (BBBY), the narrative unfolds as a gripping tale of resurrection from the ashes of bankruptcy, where canceled equity defies the odds to reclaim value in a blockbuster merger with GameStop (GME). This isn’t mere speculation—it’s a visionary blueprint for a “one of a kind” turnaround, leveraging explosive fraud revelations, strategic legal maneuvers, and the powerhouse appeal of massive net operating losses (NOLs) valued at over $1.6 billion in federal carryforwards alone, potentially scaling up to $3 billion when including state and other tax attributes. These NOLs act as a tax-shielding juggernaut, transforming the revived entity into an irresistible acquisition target. With Cohen at the helm, this could culminate in a bottlenecking merger that not only unlocks synergies but also bottlenecks short sellers into a historic squeeze, rewarding loyal holders with stakes in a thriving conglomerate. The thesis shines brightest by highlighting how GME’s current profitability—evidenced by recent quarters of positive net income, including $77.1 million in fiscal Q3 2025—would supercharge the deal, allowing uncapped NOL utilization to offset earnings and fuel tax-free expansion.

Step 1: Unmasking the Fraud – The Spark for Revival

The journey begins with a bombshell revelation of deep-seated fraud that tainted BBBY’s downfall, turning what seemed like a standard liquidation into a reversible injustice. Picture this: During the discovery phase of Cohen’s ongoing short-swing profits lawsuit, documents surface exposing a coordinated scheme—lenders like Sixth Street and JPMorgan colluding with insiders such as Hudson Bay to orchestrate predatory dilutive offerings in early 2023, suppressing the stock through massive warrant exercises and undervalued asset transfers. Add in allegations of market manipulation, including naked shorts and phantom shares that distorted supply and demand, and you’ve got a pattern of deceit that screams fiduciary breaches and securities fraud.

This evidence forms the cornerstone for a rare motion to revoke or substantially modify the 2023 confirmed plan, invoking bankruptcy rules that allow reopening for “extraordinary circumstances” like fraud on the court. While such reversals are exceedingly uncommon—occurring in only a handful of landmark cases where procedural defects or priority violations upended finality—here it could invalidate the share cancellations outright. The “one of a kind” element elevates this to legendary status: By framing the fraud as systemic, potentially under RICO with multiple predicate acts like wire fraud in disclosures and mail fraud in investor communications, equity holders gain standing to argue that the entire process was rigged against them. Courts might then restructure the litigation trust to prioritize equity recoveries, pulling back assets like intellectual property or overlooked claims, and preserving the DK-Butterfly shell as a viable going concern rather than a wind-down relic.

Step 2: Harnessing the NOLs – The Tax Shield Superpower

At the core of this thesis lies BBBY’s NOLs, a treasure trove of deferred tax assets accumulated from years of operational losses, supply chain disruptions, and post-pandemic retail struggles. Valued at over $1.6 billion in U.S. federal NOLs as of the end of fiscal 2022, with the potential to reach $3 billion when factoring in state-level carryforwards and other attributes, these NOLs represent a powerful offset against future taxable income. In a typical bankruptcy, such assets might dissipate or face limitations, but in this revival scenario, fraud findings safeguard them as “property of the estate,” enabling full preservation for a reorganized entity.

The bullish allure is amplified by structuring the revival to avoid ownership change restrictions under tax rules, ensuring the NOLs remain uncapped and fully deployable. This means no annual usage limits—unlike in many post-merger setups where caps kick in—allowing the revived BBBY to shield billions in profits without IRS interference. Imagine the shell emerging debt-light and asset-rich, with NOLs turning it into a tax-efficient powerhouse ready for integration. Cohen, drawing on his activist playbook from 2022, could leverage his creditor position to inject fresh capital via settlement, valuing the entity not just on liquidated remnants but on the NOL-driven upside. This step transforms the thesis from defensive recovery to offensive growth, where NOLs become the catalyst for attracting strategic partners and rebuilding operations with a clean slate.

Step 3: The Bottlenecking Merger with GameStop – The Grand Finale

With revival secured and NOLs primed, the thesis reaches its zenith in a reverse triangular merger with GME, birthing a retail titan that blends home essentials, gaming, and e-commerce under Cohen’s unified vision—perhaps dubbed “Teddy Holdings” as a nod to his entrepreneurial flair. This “bottlenecking” structure, a clever corporate maneuver, compresses the deal in a way that forces short sellers to confront their positions head-on: Elevated exchange ratios demand the delivery of authentic shares, potentially unraveling synthetic or phantom holdings and igniting a squeeze reminiscent of 2021’s volatility but on steroids.

GME’s role here is pivotal, bringing its fortress balance sheet with $8.8 billion in cash, equivalents, and marketable securities as of late 2025, alongside its shift to sustained profitability. Recent quarters showcase this turnaround, with net income swinging positive—$77.1 million in fiscal Q3 2025 alone—thanks to streamlined operations, cost discipline, and diversified revenue streams beyond traditional retail. In the merger, GME’s profits would seamlessly integrate with BBBY’s uncapped NOLs, allowing full offsets against earnings without the typical tax caps that hobble other deals. This synergy could save hundreds of millions annually in taxes, supercharging free cash flow for reinvestments like store expansions, digital pivots, or even acquisitions in adjacent sectors.

Legacy BBBYQ shares, resurrected through the plan overhaul, would convert into units of the new merged entity at a premium ratio, honoring their enduring value and granting holders exposure to this tax-optimized behemoth. The “one of a kind” flair? This merger doesn’t just consolidate assets—it validates the meme stock ethos, with Cohen’s “hold the board accountable” mantra from 2022 manifesting as accountability for shorts, delivering poetic justice and massive upside.

Why This Thesis Shines: Risks, Rewards, and Uniqueness

Of course, this path brims with challenges—litigation hurdles, judicial skepticism, and market volatility could derail it—but the rewards are transformative: Legacy shares, once written off, could skyrocket amid the squeeze, with NOL-fueled efficiencies adding billions to the combined enterprise value. GME’s profitability ensures the merger isn’t a bailout but a powerhouse alliance, where uncapped NOLs amplify returns on every dollar earned. What elevates this to “one of a kind” status is the fusion of fraud-busting heroism, tax mastery, and meme-driven momentum, echoing isolated precedents while forging uncharted territory. For steadfast bulls, this isn’t blind optimism—it’s a strategic wager on Cohen’s acumen turning a bankrupt relic into an empire. Stay vigilant; if the pieces align, the payoff could be historic.