DK-Butterfly-1:
The Emergence

Background: What Happened to Bed Bath & Beyond?

Before we dive into the thesis, let's establish what happened — and what the public was told versus what the documents actually show.

The Simple Version Everyone Knows

Bed Bath & Beyond (BBBY) was a once-iconic home goods retailer that fell on hard times. Years of declining sales, management missteps, and increasing debt led to its Chapter 11 bankruptcy filing on April 23, 2023. The stores closed. The brand was sold. Shareholders were told their stock was worthless. Case closed.

That's what almost every media outlet reported. But the details buried in bankruptcy filings, SEC documents, and court records tell a very different story.

What Is a "Corporate Shell" and Why Does It Matter?

When BBBY went through bankruptcy, the stores closed and the brands were sold. But the corporate entity didn't die. It was renamed "20230930-DK-Butterfly-1, Inc." and continues to exist today, actively filing with courts, pursuing lawsuits, and maintaining state registrations in 40+ jurisdictions.[1]

The name itself is significant. In nature, a butterfly emerges from a cocoon — transformed. The bankruptcy was the cocoon. What's emerging now may be something entirely different from the retailer it once was.

The Core Thesis in One Paragraph

The Key Players

Understanding this thesis requires knowing who the major players are and how they're connected. Every one of them has a specific role to play.

The Institutional Connection Web

Every major player in this thesis has direct, documented connections to Carl Icahn and his proven debt-to-equity-through-bankruptcy playbook.

These aren't coincidental associations. This is a network of institutions that have worked together before, executing exactly this type of restructuring. Everyone knows their role because they've done it before. The deepest of these connections — between Sixth Street, TPG, and Icahn — is explored in detail in the next section.

The Sixth Street Architecture & the Hindenburg Counter-Operation

A single firm controlled BBBY's entire DIP facility through three vehicles. A short-seller attack on Icahn was precision-timed to coincide with the restructuring. And the defensive response reveals what was really at stake.

TAO Talents: Unmasking the DIP Lender

BBBY's $240 million DIP credit facility — the lifeline that kept the company alive during bankruptcy — was controlled by a single firm through three vehicles:

• Sixth Street Specialty Lending, Inc. — publicly traded BDC (NYSE: TSLX)
• Sixth Street Lending Partners — private credit fund
• TAO Talents, LLC — the mysterious third entity

TAO Talents sounds like an entertainment agency. It's not. Corporate registration records reveal it shares its registered address — 2100 McKinney Avenue, Suite 1500, Dallas, Texas — with every other Sixth Street entity. "TAO" stands for "The Adjacent Opportunities" — Sixth Street's flagship balance sheet fund with over $20 billion in assets. TAO has no required liquidation date, targets 10–25% returns, and specializes in exactly the kind of transaction BBBY represented: special situations and restructurings.[83]

The Sixth Street → TPG → Icahn Pipeline

Sixth Street wasn't born independent. It was founded in 2009 as TPG's dedicated credit platform — originally called TPG Sixth Street Partners. It formally separated from TPG in May 2020, but TPG retained a significant ownership stake until September 2024, when it sold its remaining interest for over $1 billion.[82]

This means that during the BBBY bankruptcy's critical period — from filing (April 2023) through plan confirmation (September 2023) — TPG still owned part of Sixth Street. And TPG has a direct transactional relationship with Carl Icahn:

The institutional pipeline is direct: TPG/Sixth Street sold Caesars shares to Icahn → Sixth Street separated from TPG → Sixth Street controlled the BBBY DIP → BBBY restructured into DK-Butterfly-1. These aren't casual acquaintances. These are counterparties who have executed multi-billion-dollar transactions together.

Sixth Street's Restructuring Pattern: DIP → Control → Ownership

BBBY isn't the first time Sixth Street has used DIP lending to shape a bankrupt company's outcome. The pattern is documented across multiple high-profile restructurings:

• Neiman Marcus (2020): Sixth Street provided DIP financing during the luxury retailer's Chapter 11 case and emerged as a co-owner of the restructured company. DIP control translated directly into equity ownership — the same transformation that defines the BBBY thesis[84]
• buybuy BABY sale blocking: CNN reported that Go Global Retail's going-concern bid was blocked because they "could not reach agreement with lead creditor Sixth Street Partners."[85] By forcing an IP-only sale, Sixth Street ensured the corporate shell remained intact for the Butterfly restructuring

The playbook is consistent: provide the DIP, control the bankruptcy, shape asset dispositions, and emerge with strategic positioning in the restructured entity. At BBBY, Sixth Street controlled all three DIP vehicles, dictated which bids succeeded and failed, and shaped the plan that created DK-Butterfly-1.

The Hindenburg Attack: Precision Timing

On May 2, 2023 — exactly nine days after BBBY filed Chapter 11 and the Sixth Street DIP activated — Hindenburg Research published its report on Icahn Enterprises: "The Corporate Raider Throwing Stones From His Own Glass House."

IEP stock dropped 21% that day. Over the following weeks, it collapsed from approximately $50 to under $25 — a decline of more than 55%. The report alleged IEP was trading at a massive premium to its net asset value, that Icahn's dividend was unsustainable, and that his margin loans created hidden risk.

The timing was surgical. And the BBBY 10-K filing on June 14, 2023 — submitted late during bankruptcy proceedings — was not routine. It was the foundational accounting document that the Joint Plan filed five weeks later was built on. The 10-K established the NOL carryforward values, the mezzanine equity classification for HBC's instruments, the complete subsidiary structure, and the DIP credit agreement terms. Without that audited financial foundation, the Joint Plan had no legal basis. The 10-K had to come first — and it did, precisely on schedule.

Gold markers track the BBBY restructuring. Blue markers track the attack on Icahn. They're interlocked — the Hindenburg report arrived at the precise moment Icahn's capital stability was most critical to the restructuring proceeding.

The Margin Loan Vulnerability

Before July 2023, Icahn had at least eleven separate margin loan agreements with various lenders, accumulated over nearly two decades. These loans were secured by pledged IEP units — between 51% and 82% of all outstanding units at various times. The critical detail: these loans had margin call triggers tied to IEP's closing share price. If the stock dropped below certain thresholds, lenders could demand immediate repayment or additional collateral.

Hindenburg knew this. Their attack was designed to crash the stock, trigger margin calls, and force Icahn to liquidate positions — potentially including any positions connected to the BBBY restructuring.

The $867 Million Question

On April 14, 2023 — nine days before BBBY filed bankruptcy — Icahn redeemed $867 million from his IEP investment funds. Hindenburg flagged this as evidence of financial strain. But the BBBY DIP was $240 million. The bankruptcy administration costs tens of millions per year. If even a fraction of that $867 million was being redeployed into the restructuring — through Sixth Street/TAO channels or directly — it would more than cover the operation. Over the full year of 2023, Icahn redeemed $2 billion from his personal fund interests.

The SEC Settlement: A Tell

After the U.S. Attorney and SEC Enforcement both contacted IEP in the wake of the Hindenburg attack, the final outcome was remarkably modest: a $2 million total penalty (August 19, 2024). The charges were exclusively for disclosure failures — failing to update Schedule 13D filings. No fraud charges. No overvaluation claims. Hindenburg alleged IEP was a house of cards. After a full federal investigation, the SEC found a paperwork violation.

But step back and consider the sequence from Icahn's perspective. He redeemed $867 million from his funds before the attack. He restructured his margin loans to remove the exact vulnerability Hindenburg targeted — and did so on the same day he filed his first proper 13D in eighteen years. He cut the dividend preemptively, eliminating another pressure point. Every move Icahn made suggests he knew the attack vector before it was deployed. A man who has spent sixty years as the most feared activist investor in America doesn't get ambushed by a short seller. He may have anticipated the attack — or even invited it — because the resulting 82% price collapse is precisely what makes the eventual IEP acquisition affordable. At $18 billion pre-Hindenburg, GameStop couldn't touch IEP. At $4–5 billion post-attack, it can buy the whole thing with cash on hand. Hindenburg thought they were attacking Icahn. They may have been playing his game.

WestPoint Home: The Hidden Synergy

One of IEP's seven business segments is "Home Fashion" — operated through WestPoint Home LLC, which Icahn acquired out of bankruptcy in 2005 for $703 million.[86] WestPoint Home manufactures towels, bedding, sheets, comforters, blankets, mattress pads, and pillows under brands including Martex (since 1838), Vellux, and licensed brands like Ralph Lauren and Izod.

This is the same product category as Bed Bath & Beyond. IEP's majority owner already operates in BBBY's exact industry through a subsidiary he acquired using the exact same playbook: DIP lending, bankruptcy control, and debt-to-equity conversion. WestPoint Home itself resulted from mergers of three of America's oldest textile companies — J.P. Stevens (1813), Pepperell Manufacturing (1851), and West Point Manufacturing (1880). Icahn bought American industrial heritage through bankruptcy, at a fraction of its value.

The Bankruptcy Architecture: Strip the Business, Keep the Shell

The most revealing evidence comes from examining what was sold, what was retained, and the prices at which assets changed hands.

A Suspiciously Fast Timeline

BBBY filed for bankruptcy on April 23, 2023, and had its reorganization plan confirmed just 144 days later — the confirmation hearing was held September 12, 2023, with the order entered on September 14, 2023, and the plan becoming effective on September 29, 2023. The case itself remains open, with the Plan Administrator continuing to pursue litigation and manage the estate. But for a case involving 73 affiliated debtors and over $1.5 billion in liabilities, reaching confirmation this fast is extraordinarily unusual. An equity committee — which would have represented shareholder interests — was denied, despite the SEC noting that the disclosure statement was filed just one day after the court-imposed deadline.[87]

What Was Sold (For Almost Nothing)

Crucially, Sixth Street Partners (the DIP lender — analyzed in depth in Section 4) blocked a going-concern sale of buybuy BABY. A company called Go Global wanted to buy 120 stores and keep running them as an operating business. Sixth Street determined it could recover more by selling IP separately and auctioning leases individually. A going-concern sale would have included the subsidiary entity — potentially with tax attributes attached. By breaking the sale into IP-only pieces, they ensured the corporate shell remained intact and empty.

What Butterfly Retained

After all assets were sold, the renamed entity (Butterfly-1) retained:

• Corporate legal identity (SEC CIK 0000886158)
• ALL causes of action — every lawsuit, including a $47 million claim against Ryan Cohen
• Tax filing capability — the entity can still file federal and state tax returns
• Merger/consolidation execution authority — explicitly preserved in the confirmation order
• Net Operating Losses — billions in accumulated tax loss carryforwards (estimated at approximately $3.5 billion per the final 10-K, worth roughly $880 million in tax savings at the 21% federal rate)
• State registrations in 40+ jurisdictions
• Shareholder and creditor registries — through BNY Mellon and AST

The operating business was shed like dead weight. The legal entity — with its tax attributes, litigation rights, and merger authority — lives on.

The Pre-Bankruptcy Playbook: Bond Exchange, Coupon Mystery & the HBC Financing

Before Chapter 11 was filed, a series of coordinated moves were executed that only make sense when viewed as a single strategy. Each step removed an obstacle, bought time, or positioned a key player.

October 2022: The Consent Solicitation (Covenant Stripping Attempt)

On October 17, 2022, an iconic photo surfaced: Ryan Cohen and Carl Icahn together. One day later — October 18, 2022 — BBBY launched a bond exchange offer and consent solicitation, with Lazard Frères & Co. as dealer manager.[88] The timing was not coincidental.

Here's what BBBY asked bondholders to approve. These weren't minor housekeeping changes — they were the systematic removal of every covenant that could block a future change of control:

The outcome: The exchange largely failed. Most bondholders held original pre-October 2021 notes and refused to participate. This is actually bullish for the thesis — those long-term holders are exactly the qualified creditors needed under Section 382(l)(5). They held through the bankruptcy and likely received equity in the reorganized entity.

The covenant stripping attempt was Plan A. When it failed, Plan B was already in motion: file for bankruptcy, where court approval supersedes indenture covenants entirely. The bankruptcy court's confirmed plan cancelled the old notes, rendering the Change of Control put moot. DK-Butterfly-1 emerged free of all bondholder restrictions.

February 2023: The $28 Million Coupon Mystery

On February 1, 2023, BBBY missed a $28 million coupon payment on its senior notes, triggering a 30-day grace period. The company was publicly circling bankruptcy. Every financial advisor was telling them to conserve cash.

Then they paid it. Within the grace period, BBBY made the full coupon payment. Why would a company about to file Chapter 11 pay $28 million it didn't need to pay?

Because it bought exactly what they needed:

• Preserved bondholder patience — no acceleration of notes, no involuntary filing by angry creditors forcing an uncontrolled timeline
• Maintained the filing timeline — Chapter 11 was filed April 23, 2023, exactly when planned
• Protected qualified creditor status — long-term bondholders stayed in place rather than selling into a default panic
• Kept BNY Mellon's $1.18 billion claim clean — no messy default remedies complicating the bankruptcy estate

The $28M wasn't wasted — it was a precision investment in timeline control.

February 2023: The Hudson Bay Capital Financing

Simultaneously, BBBY raised approximately $225 million (with potential for $800M over eight months) through convertible preferred shares and warrants. The deal's structure reveals its true purpose:

• Hudson Bay Capital acquired 98% of all securities — 28 other investors held just 2.2%
• All securities contained 9.99% beneficial ownership blockers — self-executing provisions stating any attempt to exceed the cap was "null and void," "treated as if never made," and "cancelled ab initio"
• Hudson Bay submitted over 90 conversion and exercise requests between February and April 2023 (per HBC's own filings; Butterfly's complaint alleged over 100)
• The deal gave Hudson Bay approximately 80% of BBBY's fully diluted equity on paper — but the blockers ensured they never legally owned more than 9.99%

2024–2025: The Section 16(b) Lawsuit

DK-Butterfly-1 Inc. filed suit against Hudson Bay Capital (SDNY Case No. 24-cv-3370), alleging Hudson Bay was a Section 16 insider (beneficial owner of 10%+) despite the blockers, and seeking recovery of $300 million or more in alleged short-swing profits from purchases and sales within six-month windows.

On September 30, 2025, Judge Mary Kay Vyskocil dismissed the case with prejudice. The court's ruling was unambiguous: the 9.99% blockers were effective and not illusory. Hudson Bay could not beneficially own more than 9.99% as a matter of law. Once shares were sold, beneficial ownership was extinguished.

The Deal Behind the Deal: Who Could Actually Buy These Securities?

The February 2023 financing was structured as a registered public offering through B. Riley Securities. In theory, any investor could participate. In practice, the deal was engineered for a single buyer — and its mechanics reveal far more than the conventional narrative suggests.[32]

The $75 Million Velvet Rope

The Preferred Stock Warrants — which unlocked $800 million in future funding tranches — were only available to investors who purchased $75,000,000 or more of Series A Convertible Preferred Stock. This wasn't a standard institutional minimum. The complaint reveals that this threshold was written for Hudson Bay: they were the only entity expected to cross it. No one else subscribed for anywhere near that amount. Hudson Bay ended up with 100% of all 84,216 Preferred Warrants and 98% of the common stock underlying the entire offering, with 28 other investors splitting the remaining 2.2%.

Physical Delivery: Certified Mail Required

While the Series A Preferred Stock and Common Stock Warrants settled electronically through DTC (standard book-entry), the Preferred Stock Warrants were issued in certificated form — physical paper certificates deposited with a U.S. nationally recognized overnight courier service for hand-delivery to investors. Any notices required under the warrant agreement had to be delivered by first-class registered or certified airmail or nationally recognized overnight express courier. This wasn't a "click buy" instrument. The physical delivery requirement added deliberate friction that excluded casual or retail participants from the most important piece of the deal.

The Reporting Gap: Invisible Ownership Through Derivatives

This is where the structure gets strategically brilliant — and where the court ruling discussed above becomes essential. Warrants and convertible preferred stock are derivative securities — not common stock. The holder controls economic exposure to the underlying shares without technically owning them for reporting purposes. The 9.99% beneficial ownership blockers reinforced this: even though Hudson Bay controlled rights to ~80% of BBBY's fully diluted equity from day one, the blocker structure meant they never technically crossed the 10% threshold that triggers Section 16 insider status or Schedule 13D reporting obligations for common stock ownership. And now there's a federal court ruling confirming those blockers were legally effective — not illusory.

Put simply: you could control an enormous position in BBBY through derivative securities without appearing on any ownership filing. The warrant wrapper was a reporting shield. And it worked in both directions — it shielded Hudson Bay from insider liability, but it would also shield any other party acquiring these derivative securities or accumulating common shares on the other side of HBC's conversion-and-sell flow.

The March 30 Conversion: 89 Million Shares, Then Bankruptcy

On March 30, 2023, the remaining Hudson Bay warrants converted into more than 89 million shares of BBBY common stock — more than tripling the pre-deal share count. Simultaneously, BBBY entered into an Exchange Agreement that converted the remaining Preferred Stock Warrants into 10 million shares of common stock (with rights to 5 million more upon a reverse split), and terminated the Preferred Stock Warrants entirely. BBBY also launched a separate $300 million ATM (at-the-market) offering the same day. Twenty-four days later, on April 23, 2023, the company filed Chapter 11.

The sequence is precise: all derivative securities were converted to common stock → common stock flooded the market → price collapsed → bankruptcy filed. The derivative wrapper served its purpose (reporting shield, accumulation mechanism) and was then dissolved, leaving only common stock — which became worthless in bankruptcy for the public shareholders, but preserved the entity's NOLs and legal claims for the successor.

The Death Spiral Illusion: Hidden Accumulation Through HBC

If the HBC deal was a mechanism, the next question is: a mechanism for what? The answer lies in who was buying the shares that Hudson Bay was selling — and why the timing of the deal was dictated by a legal clock most observers didn't know existed.

The Cooperation Agreement's Hidden Clock

To understand why the HBC deal was structured the way it was — and why it arrived when it did — you have to go back to the March 24, 2022 Cooperation Agreement between BBBY and RC Ventures.

The agreement's standstill provisions (Section 2) prohibited Cohen from a wide range of actions. During the standstill period, RC Ventures could not:

• Propose any merger, acquisition, or business combination involving the Company (Section 2(a)(vi))
• Encourage or support any third party in making such a proposal (Section 2(a)(vi)(C))
• Form or join any "group" regarding the Company's securities (Section 2(a)(iii))
• Acquire more than 19.9% beneficial ownership (Section 2(a)(i))

The standstill period was defined as expiring at the earlier of (x) 30 days before the 2023 annual meeting nomination deadline, or (y) 120 days before the first anniversary of the 2022 Annual Meeting. The 2022 Annual Meeting was held July 14, 2022 — making the anniversary July 14, 2023, and the 120-day lookback approximately March 16, 2023.[29]

Now look at the timeline:

Two critical provisions in the cooperation agreement frame this entire sequence:

First: "Binding upon successors." The agreement states: "The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the Parties and their respective successors, heirs, executors, legal representatives, and permitted assigns." DK-Butterfly-1 is the legal successor to Bed Bath & Beyond. If any obligations or rights survived the standstill period (as certain provisions explicitly do per the termination clause), they flowed through the bankruptcy to the successor entity — a successor entity Cohen may one day acquire.

Second: The merger carve-out. While the standstill blocked Cohen from proposing mergers, it carved out a crucial exception: RC Ventures could "vote in its sole discretion with respect to any publicly announced proposals relating to a merger, acquisition, disposition of all or substantially all of the assets of the Company or other business combination" (Section 1(e)(iii)). Cohen couldn't propose a deal during the standstill, but once someone else proposed one — or once the standstill expired — he was free to act.

The Phantom Share Trap: A Shareholder Census Disguised as a Reverse Split Vote

The standstill expired approximately March 16, 2023. The very next day — March 17, 2023 — BBBY announced a Special Meeting of Shareholders to vote on a reverse stock split. The timing was not subtle. Cohen couldn't have called for this meeting while the standstill was active. The moment it expired, BBBY pulled the trigger.

The meeting was scheduled for May 9, 2023, with a record date of March 27, 2023. BBBY elected the "full set delivery" option — mailing physical paper copies of all proxy materials to every shareholder of record. The company repeatedly emphasized: "Your vote is very important to us regardless of the number of shares you own." They urged shareholders to vote by phone, online, or mail. They engaged proxy solicitors to chase every ballot.

This was unusually aggressive outreach for a company weeks from bankruptcy. But it makes perfect sense as a shareholder census.

The timing of the record date was surgical. March 27 captured the share count before the March 30 conversion flood (when HBC's remaining warrants converted to 89 million new common shares and the $300M ATM launched). This means the proxy tabulation would reveal who held the 428M shares that existed as of March 27 — a clean snapshot before the final dilution wave. If more shares were reported held than existed, the discrepancy would be documented in the proxy solicitor's files.

On April 5, 2023, the definitive proxy statement was filed, publicly confirming exactly 428,098,624 shares outstanding as of the record date. The company simultaneously addressed shareholder inquiries about naked short selling, stating: "The Company does not have specific access to information regarding any share lending or short selling transactions. While the Company is unable to confirm such activity, the Company denounces any market manipulation of its stock." They promised to release "the approximate count of directly registered shares once it can be confirmed."

Then, on April 23, 2023 — eighteen days later — BBBY filed Chapter 11. The May 9 vote was cancelled. The proxy data was collected but never publicly disclosed. The census was taken. The numbers were gathered. But they went into a private file — controlled by the company's advisors and, eventually, the Plan Administrator.

Two months later, the 10-K was filed on June 14, 2023 — late, during bankruptcy proceedings. It classified the HBC securities as "mezzanine equity" on the balance sheet — a category between debt and equity that reflected the convertible, hybrid nature of the instruments. This classification established the official accounting treatment that made it possible to reconcile the share count. Due to HBC's 106 conversion requests between February and April, the actual number of common shares outstanding was a moving target that only the company's own records could definitively resolve. The 10-K provided the denominator. If the proxy tabulation's numerator exceeded it, the trap was sprung.

The Accumulation Mechanism

The conventional narrative frames the HBC deal as a "death spiral" — a predatory financing where Hudson Bay converted preferred shares to common stock at a discount, dumped them on the open market, and crushed the share price. According to The Wall Street Journal, Hudson Bay bought approximately $360 million in convertible preferred shares, converted them to common stock, and sold into the market. The stock price collapsed from ~$6 to under $1. Case closed: predatory hedge fund destroys meme stock.

On February 9, 2023 — one day after the HBC deal was announced — Michael Burry posted a now-deleted tweet: "It's time memesters look up what a death spiral convertible is." Media outlets universally interpreted this as a warning to sell. But Burry's phrasing is worth reading carefully. He didn't say "this is going to destroy the stock." He said look it up — understand the mechanism. And understanding the mechanism is exactly what reveals the alternative read. Because a death spiral convertible doesn't just destroy share price. It creates a massive, predictable, controllable flow of cheap shares into the open market — exactly the conditions needed for hidden accumulation.

Someone was buying every share Hudson Bay sold.

The volume data tells the story. On April 19, 2023 alone — four days before the bankruptcy filing — BBBY traded over 900 million shares, with approximately 70% routed through off-exchange (dark pool) venues. The company had only 428 million shares outstanding. More than double the entire share count changed hands in a single day — and the majority of that volume was invisible to the public tape. An SEC comment letter filed by an individual investor stated it plainly: "There are only 428M shares issued by Bed Bath and Beyond. Blatant manipulation of our markets." Whether the volume represented phantom share creation, frenzied accumulation, or both, the scale is difficult to reconcile with a clean settlement system.

The 10-K filing on June 14 takes on additional significance in this context. Before its release, the exact share count was a moving target — HBC's 106 conversion requests between February and April meant shares outstanding changed almost daily. No one outside the company could say with precision how many shares should exist. The 10-K established the official denominator. For any party that had been tracking the volume — and particularly the off-exchange volume — the 10-K provided the first opportunity to compare the official share count against accumulated market data. If more shares were trading than existed, the 10-K was the document that proved it.

Here's why this works for hidden accumulation:

• No 13D/13G required — buyers purchasing on the open market can accumulate up to 4.99% without any public filing. Using multiple affiliated entities, each staying below the threshold, allows even larger positions.
• The 9.99% blockers on HBC meant Hudson Bay was forced to keep selling — creating a continuous, reliable supply of shares for buyers to absorb.
• High daily volume from retail meme-stock trading masked institutional accumulation patterns.
• Collapsing price meant the same dollar amount bought progressively more shares — exactly what you want if your goal is maximum share accumulation before a bankruptcy filing.

As detailed above, on March 30, 2023, the remaining warrants converted to approximately 89 million shares of common stock — dissolving the derivative wrapper and flooding the market with a final wave of sellable shares. Twenty-four days later, BBBY filed Chapter 11. Whoever accumulated those shares during the "death spiral" became common equity holders — positioned exactly where they needed to be for a future 382(l)(5) reorganization that requires old shareholders to own 50%+ of the new entity.

The death spiral wasn't predatory financing destroying a company. It was a distribution mechanism — moving shares from a single concentrated holder (HBC) into the hands of parties who needed to own them for the next phase.

Teddy Holdings LLC: The Merger Subsidiary?

In a reverse triangular merger, the acquirer doesn't merge directly with the target. Instead, it creates a wholly-owned subsidiary that merges into the target entity. The target survives as a public company — now controlled by the acquirer, carrying its NOLs, and operating under new management.

On August 13, 2021 — seven months before Cohen acquired his BBBY stake — an entity called Teddy Holdings LLC was registered in Wilmington, Delaware. Its trademark filings with the USPTO tell a remarkable story:[27]

The entity is named after Cohen's late father, Ted Cohen, who passed away in December 2019. Its attorney of record is at Olshan Frome Wolosky LLP — a firm specializing in M&A and activist investing. Trademarks were filed in the U.S., China, UK, EU, and Canada — a global footprint from day one.

Critically, Teddy Holdings is not listed in GameStop's Exhibit 21 subsidiary filings — it is currently held by Cohen personally (or through RC Ventures), not by GameStop. Olshan Frome Wolosky is Cohen's personal activist-investing law firm, not GameStop's counsel. This means Teddy sits outside GameStop's corporate structure for now.

But recall GameStop's March 2025 investment policy revision: the company can invest in private companies, and Cohen can personally "invest in the same securities in which the Company invests." This creates a clean pathway — Cohen contributes Teddy Holdings to GameStop at the moment of execution, the investment policy pre-authorizes the alignment, and Teddy becomes the merger subsidiary. Holding it privately until then gives maximum flexibility and zero disclosure obligation.

In the reverse triangular merger structure: Teddy Holdings (subsidiary) merges into DK-Butterfly-1 (target). Butterfly survives as the legal entity — then is renamed Teddy Holdings, carrying BBBY's billions in NOLs under a new brand identity built from Cohen's trademark portfolio. No IPO needed. No new SEC registration. The same CIK number, the same tax attributes, a completely different company.

The Tax Engine: Why Billions in NOLs Change Everything

This section explains the single most important financial concept in the thesis. If you understand NOLs and Section 382(l)(5), everything else falls into place.

What Are NOLs?

BBBY accumulated billions in NOL carryforwards from years of mounting losses. Community analysis of the final 10-K estimates the total federal NOL carryforward at approximately $3.5 billion.[10] At the current 21% corporate tax rate, these losses could save a future owner roughly $735 million in federal cash taxes alone, with additional state-level NOLs potentially pushing the total tax benefit toward $880 million. That's real money that goes straight to the bottom line instead of to the IRS. (Note: BBBY's final fiscal year 10-K was never fully completed due to the bankruptcy filing; the $3.5 billion figure is derived from community analysis of the last available filings and cumulative reported losses. The exact figure has not been independently verified against a final audited disclosure.)

The Section 382 Problem (and the Bankruptcy Solution)

There's a catch. Section 382 of the Internal Revenue CodeA tax law provision designed to prevent companies from being acquired solely for their tax losses. It limits how much of the NOLs a new owner can use each year after an "ownership change." normally limits how much of a company's NOLs can be used after an "ownership change" (when new owners acquire more than 50% of the stock). The limit is typically so low that the NOLs become nearly worthless.

However, there's a powerful exception for companies in bankruptcy:

Why Former BBBY Shareholders MUST Receive Shares

This is the key that unlocks the entire thesis. Section 382(l)(5) doesn't care what the bankruptcy plan said about equity being cancelled. It only cares about who owns the reorganized entity after the merger.

If GameStop acquires Butterfly, it must ensure that former BBBY shareholders and qualified creditors own at least 50% of the new combined entity. The only way to do that is to issue GameStop shares to those former shareholders. Not because the bankruptcy plan requires it — but because the tax code requires it for the NOLs to survive unrestricted.

Former shareholders aren't getting charity. They're being paid because their participation is worth exactly the tax savings the NOLs provide. Without them, the NOLs are effectively worthless. With them, GameStop saves $336 million+ in taxes.

The NOL Protection Order — A Smoking Gun

The BBBY bankruptcy court issued a Final NOL Order — a formal court order designed to protect the NOLs from being destroyed by uncontrolled stock trading.[1] The case docket includes procedures for tracking stock transfers, declarations for substantial shareholders, and forms for anyone intending to accumulate or transfer shares.

You don't spend legal resources building an elaborate protection framework around a worthless asset. BBBY's own 10-K (filed June 14, 2023, during the bankruptcy) states: "The bankruptcy court has entered an order that is designed to protect our NOLs until a plan of reorganization is consummated."[11]

Critically, the standard language found in true liquidations — "the Debtors were unable to monetize their tax attributes" — appears to be absent from BBBY's filings.

The Two-Year Freeze & 4.5% Trading Restrictions (Now Expired)

Section 382(l)(5) includes a critical restriction: if a second ownership change occurs within two years, the NOL limitation drops to zero — effectively destroying them. The plan effective date was September 29, 2023. The two-year freeze expired September 29, 2025. Butterfly is now legally free to merge without this risk.

To protect against accidental ownership changes during this window, the bankruptcy court issued an NOL Protection Order with teeth. The order imposed a 4.5% beneficial ownership threshold — any shareholder approaching this level had to file declarations and get court approval before trading. This 4.5% buffer (below the 5% ownership change trigger that feeds into Section 382's 50% test) prevented uncontrolled accumulation that could have destroyed the NOLs before the freeze expired.

The order established formal procedures: stock transfer tracking mechanisms, mandatory declarations for substantial shareholders, and pre-approval requirements for anyone intending to accumulate or transfer significant positions. These restrictions stayed in place throughout the two-year freeze period — another investment of legal resources that only makes sense if the NOLs have a planned future use.

The Continuity Problem — and How Overstock May Solve It

There's another requirement that rarely gets discussed: the continuity of business enterprise (COBE) test. Under Treasury regulations, when a company claims NOLs after a reorganization, the acquiring entity must either continue a significant line of the old business or use a significant portion of the old business assets for at least two years. If GameStop — a video game retailer — acquires DK-Butterfly-1, the IRS could challenge the NOLs on the grounds that nobody is continuing BBBY's home goods business.

The bankruptcy estate's own filings confirm the NOLs were being treated as a live asset with planned future value. Docket 2686 — an application to retain Gibbons P.C. as special counsel for the Official Committee of Unsecured Creditors — reveals that the firm was specifically engaged to work on "Tax Issues" alongside asset analysis and recovery. The filing states that no post-confirmation corporate structure had yet been implemented to "monetize the NOLs" and acknowledges the "limited nature by which an entity may transfer certain tax attributes." The Creditors' Committee hired dedicated tax counsel to figure out how to unlock the value of the NOLs — you don't retain special counsel for tax issues on a worthless asset.

This is where a seemingly unrelated transaction becomes potentially critical. In the 363 asset sales, Overstock (which later rebranded to Beyond, Inc. and then reclaimed the Bed Bath & Beyond name, now trading as NYSE: BBBY — not to be confused with the original bankrupt entity) purchased the Bed Bath & Beyond brand, domain, trademarks, and customer data for $21.5 million. The company relaunched the BBBY brand as an online home goods retailer — meaning the business enterprise of selling home goods under the Bed Bath & Beyond name continues to operate. If the post-merger entity can demonstrate a connection to that ongoing business — through licensing, a re-acquisition of the IP, or even through WestPoint Home (Icahn's IEP subsidiary) operating in the same home textiles category — the COBE test could be satisfied. The BBBY business didn't die. It was transplanted. And the entity that holds the NOLs may only need to show that the transplant survived.

But Overstock's role may run deeper than a convenient COBE bridge. Overstock is one of the original heavily shorted stocks — and its founder, Patrick Byrne, waged one of the most aggressive public campaigns against naked short selling in market history. Byrne filed lawsuits against major Wall Street firms, funded research into failures to deliver, and in 2019 issued a blockchain-based digital dividend specifically designed to force short sellers to close positions by creating an obligation they couldn't synthetically replicate. The Overstock dividend is widely regarded as the direct precursor to GameStop's October 2025 warrant dividend — the same mechanic, the same logic, the same target.

If Overstock was a friendly buyer in the 363 sale — cooperative rather than arm's-length — several puzzle pieces click into place. The absurdly low $21.5M price for a brand that generated billions in annual revenue isn't a failure of the auction process. It's the point: strip the operating assets cheaply to a friendly who keeps the business alive for COBE purposes while the shell retains its NOLs and litigation portfolio. And because the new Bed Bath & Beyond (formerly Overstock) has historically been a target of heavy short selling itself, the contagion mechanics described in Section 17 potentially apply here too. If the same institutions shorting GME and carrying phantom BBBY obligations are also short the company that now operates the BBBY brand, the squeeze doesn't just cascade through the obvious meme stock basket — it reaches into the very entity that was positioned to preserve the NOLs. The architecture is circular: the friendly buyer enables the tax shield, the tax shield enables the merger, the merger triggers the squeeze, and the squeeze hits the same short sellers who targeted the friendly buyer.

Then, in September 2025, the coordination became impossible to ignore. The new Bed Bath & Beyond (which had rebranded from Beyond, Inc. and reclaimed the NYSE ticker BBBY) announced its own warrant dividend — and the timing was virtually identical to GameStop's:

Same ratio. Same distribution date. Record dates one day apart. Both on the NYSE. Both expiring October 2026. Two companies — one that Ryan Cohen chairs, and one that bought the bankrupt BBBY's brand — deployed the exact same short-squeeze mechanism simultaneously. Any short seller carrying obligations across both stocks faced synchronized warrant delivery requirements on the same day, creating compounding pressure that neither position could absorb independently.

The new BBBY's corporate structure deepens the connection further. Under Executive Chairman Marcus Lemonis, the company now owns the Bed Bath & Beyond brand, Overstock, buybuy BABY, Kirkland's Home — and critically, a blockchain asset portfolio including tZERO. tZERO is the blockchain-based securities trading platform that Patrick Byrne built specifically to combat naked short selling through transparent, immutable settlement. The same company that pioneered the blockchain dividend as a squeeze weapon in 2019 now sits inside the entity that holds the old BBBY brand, issued a synchronized warrant dividend with GameStop, and owns the blockchain infrastructure that could replace the settlement system enabling phantom shares. This isn't a coincidence. It's a blueprint.

The Section 269 Anti-Abuse Hurdle

There's one more tax obstacle the thesis must address. 26 U.S.C. § 269 gives the IRS power to disallow deductions, credits, or other tax benefits if the "principal purpose" of an acquisition was evasion or avoidance of federal income tax. If GameStop acquires Butterfly and the IRS determines the deal was primarily about harvesting the NOLs, Section 269 could wipe out the entire tax benefit.

This is where the non-tax advantages of the Butterfly shell become legally critical — not just strategically useful, but essential to surviving IRS scrutiny. The acquiring entity needs to demonstrate that the NOLs were a benefit of the acquisition, not the benefit. And Butterfly offers substantial non-tax value:

The Section 269 defense writes itself: GameStop is acquiring a corporate entity with hundreds of millions in active litigation, established corporate infrastructure, court-authorized merger authority, and nationwide registrations. The NOLs are a valuable feature of the entity — but the entity has independent, substantial, non-tax value. The principal purpose isn't tax avoidance. It's the acquisition of a litigation portfolio and corporate shell that happens to carry tax attributes.

Goldberg v. IRS — The Fight Is Already Underway

In early 2026, Plan Administrator Michael Goldberg filed an adversary proceeding against the Internal Revenue Service — Goldberg v. Internal Revenue Service, Adversary Proceeding No. 26-01030, in the same New Jersey bankruptcy court overseeing the Chapter 11 cases. The details of the proceeding haven't been made public, but the fact that the estate is actively litigating against the IRS confirms that the tax attributes are being treated as live, valuable assets worth fighting for — not relics of a dead company.

The adversary proceeding could involve a tax refund claim (carrying back NOLs to prior profitable years), a declaratory judgment on the validity or amount of the NOLs, or a dispute over how the tax attributes can be monetized going forward. Whatever the specifics, the signal is unmistakable: nearly three years after the bankruptcy was filed, the estate is spending legal resources to fight the IRS over tax assets. That only makes sense if someone — the Plan Administrator, the creditors, or a future acquirer — has a plan to use them.

The Hidden War Chest: Litigation Worth Hundreds of Millions

Butterfly isn't quietly winding down. It's aggressively pursuing lawsuits against some of the world's largest companies, with settlements filed under seal.

Federal Maritime Commission Cases

Butterfly is running six or more active cases against the world's largest shipping companies for alleged violations during the supply chain crisis:[12]

The MSC case alone claimed $112.8 million in damages and was settled for a confidential amount filed under seal. Every sealed settlement adds cash to the estate without any public disclosure.

Other Active Cases

• HBC Section 16(b) lawsuit: Filed 2024, dismissed with prejudice September 30, 2025. As analyzed in Section 6, the dismissal established precedent that the 9.99% blockers were effective — a ruling with significant implications for the Change of Control and merger analysis, whether or not the outcome was strategically intended
• Cohen 16(b) lawsuit: $47 million sought for alleged short-swing profits; fact discovery closed February 20, 2026; summary judgment deadline April 7, 2026

The Cohen Lawsuit Paradox: Suing Yourself for $47 Million

The Section 16(b) lawsuit against Cohen deserves special attention — not for its legal merits, but for its strategic implications under the merger thesis.

The case was filed August 1, 2024 by DK-Butterfly-1 — the entity controlled by Plan Administrator Michael Goldberg. Cohen's motion to dismiss was denied on April 18, 2025, with Judge Buchwald finding it "strains credulity" that Cohen didn't know his stake exceeded 10%.[28] Yet despite surviving dismissal, the case has moved at a remarkably measured pace — only 13 docket entries through early 2026 for a straightforward Section 16(b) claim seeking $47 million.

Now consider what happens if GameStop acquires DK-Butterfly-1:

• The $47 million claim against Cohen becomes a GameStop asset — Cohen's own company would hold the lawsuit against him
• As CEO, Cohen would effectively be suing himself — an obvious conflict that would likely result in settlement or dismissal
• Any settlement amount would be an internal transfer — Cohen paying money to a company he controls, which flows back to him through equity ownership
• The claim could even be used as consideration in the merger itself — "we'll release the $47M claim as part of the acquisition price"

• Goldberg v. Evenflo: Summary judgment hearing March 10, 2026
• Goldberg v. IRS: An adversary proceeding (Case No. 26-01030) where Butterfly is actively fighting the IRS — indicating the entity has tax positions worth defending[1]

GameStop's Resources & Cohen's $35 Billion Bet

GameStop has amassed extraordinary financial resources — and Cohen has structured his entire compensation to depend on a transformation that's impossible through the existing business.

Financial Firepower

The authorized share increase to 1 billion was filed March 31, 2022. The filing stated the increase was "to implement stock split AND provide flexibility for future corporate needs." A 4:1 stock split only required ~300 million shares. The remaining capacity was explicitly reserved for the future.

Cohen's Impossible Compensation Plan

In January 2026, Cohen agreed to a compensation structure with nine milestone tranches:[2]

Total potential value: $35 billion in stock options at $20.66/share.

Three weeks after announcing this plan, Cohen told the world he's making the biggest acquisition in GameStop's history. He gets ZERO if GameStop stays a video game retailer. His entire financial future depends on exactly the kind of transformation this thesis describes.

Cohen's Own Words: The Acquisition He's Describing

On January 30, 2026, Cohen gave rare interviews to both CNBC and The Wall Street Journal, describing his acquisition plans in unusually specific terms. His exact language is worth examining against this thesis:[30]

Something unusual emerges when you map his words to specific targets: every descriptor fits not one but two candidates — the Butterfly shell explored in this section, and a second target explored in detail in Sections 10–11. A tax shield is only as valuable as the income it shelters. If the first acquisition provides the shield and the second provides the income, Cohen's language doesn't have to be about one or the other — it can be about both.

Separately, Michael Burry — who disclosed buying GameStop shares the same week — explicitly mentioned in his Substack that GameStop's substantial net operating losses could allow the company to offset future taxable income, making it an attractive acquirer. Burry characterized Cohen as having "a crappy business" but praised him for "milking it best he can while taking advantage of the meme stock phenomenon to raise cash and wait for an opportunity to make a big buy." He recommended GameStop follow the Berkshire Hathaway playbook.[31]

Investment Policy: The Blueprint for Acquisition

GameStop's Investment Policy, revised March 18, 2025, reads like a roadmap for exactly this thesis. Permissible instruments now include: cash and cash equivalents, fixed-income securities, equity securities listed on NYSE, NYSE American, NYSE Arca, and Nasdaq — as well as crypto-currencies including Bitcoin.

But the most revealing clause is about the Investment Committee itself:

Cohen personally investing in the same securities as GameStop ensures perfect alignment for any future merger target. When GameStop acquires a company, Cohen will already have a personal stake — his interests and the company's are legally structured to be identical.

Risk Factor Language: Hiding in Plain Sight

GameStop's 10-K filings from fiscal 2023 and 2024 contain risk factor language that doesn't match a company holding Treasury bills:

Treasury bills and government notes don't lose meaningful value — they mature at par. These risk factors warn about concentrated holdings with real downside volatility that the company intends to hold even when showing paper losses. This is the language of a company preparing for equity positions or acquisitions, not a Treasury portfolio.

The Berkshire Hathaway Parallel

The comparison between Cohen's GameStop and Buffett's Berkshire is more literal than most analysts realize.

One analyst noted the parallel with remarkable precision, writing that Cohen is "using tax loss carry-forwards, reducing capital expenditures, boosting cash flow, and acquiring high-quality assets with sustainable cash flow growth" — precisely Buffett's early playbook.[14]

Burry himself wrote that Cohen's moves at GameStop are "a decent throwback model of Buffett" and that Cohen has "rougher edges than Buffett, but that just makes him more modern in approach."[15]

But the Berkshire comparison becomes even more literal when you consider Cohen's own words. He told CNBC: "Similar to Berkshire Hathaway, except what Berkshire did in decades we're attempting to do in a much shorter time." There's only one way to build a Berkshire in a much shorter time — you don't build it from scratch. You acquire one that already exists.

This is where the thesis expands beyond Butterfly. The DK-Butterfly-1 merger gives GameStop the tax shield — billions in NOLs to shelter future income. But a tax shield is only valuable if you have income to shelter. The next section argues that Cohen's language about a "very, very, very big" acquisition of a "publicly traded company" describes not Butterfly itself, but the second phase: acquiring an existing conglomerate whose operating businesses generate the cash flows that Butterfly's NOLs would protect. Butterfly is the foundation. What follows is the building.

The Sleeping Giant: GameStop's Acquisition Target

If Butterfly is Phase 1 — the tax shield — then Phase 2 is the operating empire that makes the shield worth something. One specific conglomerate matches every criterion Cohen described, and its name may have been hidden in a tweet from June 2022.

The Coded Message

On June 12, 2022, Ryan Cohen tweeted what appeared to be a Napoleon quote: "China is a sleeping giant. Let her sleep, for when she wakes she will move the world." His followers debated whether it was geopolitical commentary. But Cohen communicates in code — his tweet history is an extended exercise in misdirection, humor, and hidden meaning that the retail investor community has spent years decoding.

CHINA rearranges to ICAHN. Five letters. And the quote isn't about destruction — it's about latent power. The sleeping giant is dangerous not because it's weak, but because it's temporarily dormant and its true strength hasn't been unleashed.

The tweet landed in June 2022 — the middle of Cohen's cooperation agreement standstill period with BBBY, roughly two months before his August "sale" of BBBY shares, and during the period when the restructuring architecture was being designed.

Cohen's Words Through an IEP Lens

Cohen's January 2026 interview language was mapped against the Butterfly thesis in Section 9. But several of his descriptors carry additional weight when applied specifically to Icahn Enterprises — particularly those that don't fit a bankruptcy shell at all:

The Numbers Work

IEP's current market capitalization sits at approximately $4–5 billion — down from $18 billion pre-Hindenburg. GME holds approximately $9 billion in cash and liquid securities. GameStop could acquire IEP outright with cash on hand and still have billions remaining. This is the Icahn playbook being used on Icahn — buy the holding company at a steep discount to its net asset value.

IEP's underlying businesses include CVR Energy (petroleum refining, nitrogen fertilizers, publicly traded on NYSE), Icahn Automotive / Pep Boys (nationwide service centers), WestPoint Home (textiles), Viskase (food packaging), real estate holdings, Vivus (pharmaceuticals), and the Investment Funds (billions in activist positions). Combined with GameStop's and Butterfly's NOLs, the revenues from these operating businesses could be substantially sheltered from taxation — the Berkshire Hathaway model Cohen explicitly described.

Now recall the alignment clause and risk factor language from Section 9. IEP trades on Nasdaq — a permissible exchange under GameStop's investment policy. It has been beaten down 75%+ from its pre-Hindenburg price — a concentrated position would show exactly the kind of paper losses the risk factors warn about. And the alignment clause creates three separate accumulation channels: GameStop through its investment portfolio, Cohen personally, and RC Ventures as an "affiliated investment vehicle." All three could be accumulating IEP units independently, all disclosed in advance through the investment policy, and all perfectly legal. When the acquisition is announced, all three positions converge into the same trade. The policy doesn't just permit this — it was written to enable it.

The Succession Problem That Solves Itself

Carl Icahn turns 90 in 2026. He controls approximately 85–92% of all outstanding IEP depositary units. There is no hostile takeover possible — any deal requires one man's agreement. And the biggest question hanging over IEP for years has been: who inherits the empire?

On October 1, 2020, IEP announced the answer — at least partially. Brett Icahn, Carl's son, would rejoin the firm under a formal succession plan. Brett was given a seven-year term managing a portfolio within the Investment segment, joined the Board, and purchased $10 million in IEP units from his father. The plan stated Brett would succeed Carl as Chairman and CEO at the end of the term — October 2027 — or earlier at Carl's discretion.

Brett's Team: A Restructuring War Room

When Brett returned in October 2020, he hired three portfolio managers. Their backgrounds are not those of passive stock-pickers:

• Gary Hu — from Silver Point Capital, a firm specializing in distressed debt investing. Silver Point buys distressed bonds and converts them to equity through restructurings
• Steven Miller — from BlueMountain Capital Management's Distressed and Special Situations group. The name of his former group literally describes the BBBY play
• Andrew Teno — from Fir Tree Partners, an activist fund taking concentrated positions and pushing for operational changes

This is an M&A execution squad. People who evaluate distressed assets, structure deals, and integrate operating businesses. If GME acquires IEP, these are the people who run the portfolio company integrations alongside Cohen's operational team.

The Sargon Portfolio: Empire Through Unification

Brett's earlier portfolio at Icahn Capital was called the "Sargon Portfolio" — generating annualized gross returns of 26.8% from 2010 to 2016, growing from $300 million to approximately $8 billion.[90] It was named after Sargon of Akkad, the ancient Mesopotamian king who created history's first empire by unifying disparate city-states under one ruler.

A GME acquisition of IEP would be exactly that — unifying disparate operating businesses under one corporate umbrella, managed by the young successor who proved himself through exceptional returns before inheriting the empire.

Passing the Torch Through Transformation

This isn't Carl handing Brett a damaged brand. The torch is being passed through a transformation that benefits every party at the table. And crucially, the torch isn't just Carl to Brett — it's Carl to both Cohen and Brett, with a clear division of responsibilities:

• Ryan Cohen becomes the capital allocator — the Buffett figure. Strategic vision, public face, acquisition strategy, shareholder communication. His $35 billion compensation package incentivizes exactly this role.
• Brett Icahn becomes the operating manager — running portfolio companies, deploying distressed expertise, handling day-to-day investment decisions. His 26.8% annualized Sargon returns and hand-picked team of distressed specialists equip him for precisely this.
• Carl Icahn becomes the patriarch emeritus — his empire preserved and amplified rather than slowly unwinding. His network, institutional relationships, and decades of restructuring knowledge transition during an overlap period.

This is the Berkshire shortcut Cohen described — you don't construct a conglomerate from scratch over 60 years. IEP already has seven diversified operating businesses. It already has the investment management arm. It already has the insurance-like structure where the holding company collects distributions from subsidiaries. You just need to buy it at a discount and install new management. That's how you compress decades into years.

The Converging Timelines

The margin loan maturity was extended to July 2027.[91] Brett's succession term ends October 2027. These timelines converge deliberately — the acquisition needs to close before both deadlines. Cohen told the WSJ he plans to approach targets "soon," and his compensation package requires a shareholder vote expected in March or April 2026. And if the thesis is correct — that the coordination traces back not just to the October 2022 photo, but to autumn 2020, when Cohen began buying GME and Brett launched his succession plan with a team of distressed-debt specialists in the same weeks — then this relationship has been building for over five years. The public announcement wouldn't be the beginning of a negotiation. It would be the reveal of one that's already complete.

IEP's Unique Structural Acquirability

IEP is a master limited partnership, not a regular corporation. Carl Icahn personally controls approximately 85–92% of all outstanding depositary units. This structural reality means an acquisition requires one person's agreement. There is no hostile takeover battle. No proxy fight needed. No shareholder campaign to wage. If Carl says yes, the deal happens. The 8–15% public float is a small minority that would receive the same premium.

The margin loan structure actually enables the acquisition rather than blocking it. After the July 2024 amendment, Icahn pledged 406 million IEP units as collateral.[91] In an acquisition scenario, those pledged units convert to acquirer shares (GME shares) at the acquisition premium. The lenders' collateral increases in value — their beaten-down IEP units become GME shares worth more per unit. The lenders benefit from the deal. This alignment of incentives means the margin loan holders would likely support an acquisition, not obstruct it.

Brett's Expanding Footprint

Brett Icahn isn't just waiting for a transition — he's actively expanding his operational role. In August 2025, Brett was appointed to the Board of Directors of SandRidge Energy, an Oklahoma-based oil and gas company in which Icahn entities hold significant positions. This is how the next generation establishes credibility: board seats, governance experience, and direct operational oversight of the portfolio companies he'll eventually manage. Each board appointment is another piece of the infrastructure being built for the transition — whether that transition happens within a standalone IEP or within a combined GME/IEP entity.

The NOL Multiplier

As noted in Section 9, Burry explicitly highlighted GameStop's NOLs as making it an exceptional acquirer. The combined NOL picture — GameStop's own losses + DK-Butterfly-1's billions + any NOLs within IEP's portfolio companies — means every dollar of operating income from IEP's businesses is worth approximately 25% more inside the combined entity than inside IEP alone. The tax shield doesn't just preserve value. It creates it.

The Complete Architecture: Five Years in the Making

How the Merger Would Actually Work

Step by step: the legal mechanics of acquiring Butterfly, preserving the NOLs, and distributing consideration to former shareholders.

The Execution Path

Why No Plan Amendment Is Needed

A common objection is: "The bankruptcy plan cancelled equity. Shareholders can't get anything." But this misunderstands the legal structure:

• The bankruptcy plan (completed) cancelled old equity and distributed assets to creditors. That process is done.
• The merger (future) is a separate legal event. GameStop isn't paying through the bankruptcy estate — it's issuing its own shares directly to people it needs for 382(l)(5) compliance.
• The cancelled shares weren't destroyed — the transfer agent (AST) has records of who held shares as of the cancellation date. DTC has records. Every broker has records.

The Teddy Scenario: How It All Fits Together

If Teddy Holdings LLC is the merger subsidiary, the full execution path becomes concrete:

1. Cohen contributes Teddy Holdings to GameStop — either as a direct sale, asset contribution, or through the investment policy framework that already authorizes Cohen to invest alongside the company. GameStop's $9 billion cash pile funds the acquisition.
2. Teddy Holdings becomes a GameStop subsidiary — now carrying its trademarks (home textiles, online marketplace, baby products) and Cohen's operational blueprint for a consumer holding company.
3. Teddy merges into DK-Butterfly-1 — the reverse triangular merger. Butterfly survives as the public entity, now a GameStop subsidiary. Teddy's trademarks, brand identity, and product categories flow into the shell.
4. Butterfly is renamed Teddy Holdings — the surviving legal entity retains its CIK number, tax attributes, and corporate identity, but operates under the Teddy brand. Just as BBBY was renamed "20230930-DK-Butterfly-1" in bankruptcy, Butterfly can be renamed again. The NOLs don't care what the entity is called — they care that the entity continues to exist.
5. GameStop issues shares to former BBBY shareholders and qualified creditors — satisfying the 382(l)(5) continuity requirement. The NOLs carry forward unrestricted.
6. GameStop acquires a large profitable consumer company — applying the NOLs to shield combined income. Cohen's compensation milestones ($80B, $100B market cap) become achievable.

The Complete Machine: How Teddy, Butterfly & IEP Work Together

The Butterfly merger and the IEP acquisition are not competing theories. They are sequential phases of a single strategy — and the "Hollow Men" manifesto reveals what comes after.

Two Moves, One Strategy

Sections 9–11 established the two-phase framework. Here's how the sequence actually executes: the Butterfly merger captures the NOLs, triggers the short squeeze, and issues shares to former BBBY shareholders. The resulting market cap — potentially $100B+ post-squeeze — gives GameStop the equity firepower to acquire IEP at a fraction of NAV. The NOLs then shelter IEP's operating income, making every dollar of cash flow from CVR Energy, Pep Boys, and WestPoint Home worth ~25% more inside the combined entity.

The Product Overlap That Proves the Connection

One detail links the Teddy angle and the IEP angle into a single coherent strategy. Teddy Holdings' trademark filings cover bed linens, towels, blankets, sheets, duvet covers, shower curtains — BBBY's core product categories. IEP's WestPoint Home manufactures towels, bedding, sheets, comforters, blankets, mattress pads, and pillows — the same products, under brands like Martex (since 1838), Ralph Lauren, and Izod.

Teddy is the consumer brand. WestPoint Home is the manufacturing and supply chain backbone. One faces the customer. The other makes the product. Together they form a vertically integrated home textiles business — the spiritual successor to Bed Bath & Beyond, built from a trademark portfolio filed by Cohen's personal M&A law firm and a manufacturing subsidiary Icahn acquired out of bankruptcy using the exact same DIP-to-equity playbook now being executed at BBBY.

This isn't two unrelated theories that happen to involve the same people. This is a single business plan where the brand (Teddy), the tax shell (Butterfly), and the operating infrastructure (IEP/WestPoint Home) each contribute an essential component. Remove any one piece and the plan is incomplete.

"The Hollow Men" — A Manifesto for Serial Acquisition

On February 18, 2026, Cohen published "The Hollow Men" on X — a 500-word broadside against what he called "a new, parasitic class of corporate bureaucrat: The Risk-Free Insider." Burry immediately shared it, writing: "Ryan has rougher edges than Buffett, but that just makes him more modern in approach."

Read as philosophy, it's a call for corporate accountability. Read as strategy, it's something far more specific — a target identification framework for serial acquisition:

• "Iconic American franchises hollowed out by fees" — companies with real assets and real brands, managed into decline by extractive leadership. These are acquisition targets.
• "Directors who exist solely to collect fees, Executives who exist solely to collect bonuses, Managers who exist solely to hire consultants" — this is the definition of "sleepy management teams" and "under-optimized assets." Cohen used those exact phrases three weeks earlier to describe his acquisition target.
• "We have severed that link" between authority and liability — the cure is an owner-operator who has skin in the game. Cohen takes zero salary and has $35 billion in equity compensation tied to performance. He is the cure he's describing.
• "The era of the Risk-Free Insider must end" — this isn't a suggestion. It's a promise. Cohen is telling the market he intends to replace hollow men with owner-operators, company by company.

IEP isn't the end. It's the beginning.

"Ryan Cohen Buys All Stocks"

In January 2023 — during the HBC deal window, as the BBBY accumulation phase was unfolding — Cohen tweeted an image of a television news headline: "Ryan Cohen Buys All Stocks. GameStop Chair Decided on Monday to buy all the stocks." But consider what happens if the Butterfly merger and IEP acquisition succeed:

• GameStop's market cap is $100 billion+ (Cohen's compensation target)
• The combined entity holds IEP's seven operating businesses, Butterfly's NOL shield, Teddy's consumer brand, and billions in deployable capital
• Brett Icahn's team — three distressed-debt specialists from Silver Point, BlueMountain, and Fir Tree — is operational
• The "Hollow Men" manifesto has publicly identified the next category of targets: iconic American companies run by parasitic insiders
• Every acquisition generates taxable income that the NOL shield reduces by 21%
• Every acquisition adds operating businesses to the conglomerate, compounding the Berkshire model

The machine, once built, is self-reinforcing. Acquire an undervalued company → replace hollow management with owner-operators → use NOLs to shelter the income → reinvest the tax savings into the next acquisition → repeat. This is exactly how Buffett built Berkshire Hathaway, except Buffett used insurance float as his recurring capital source and Cohen would use NOL tax savings plus the holding company's cash flow.

The Acceleration Factor: Could This Happen Fast?

A common assumption is that deals of this complexity take years to negotiate and execute. But consider what's already in place — and what it implies about how far advanced the preparation may be.

White & Case: The Firm Behind the Compensation Package

The "third-party compensation advisory firm" that designed Cohen's $35 billion pay package was White & Case LLP — one of the world's top-ranked M&A law firms. Their own press release reveals the team composition:[49]

• Richard Brand — M&A partner, Global Head of Shareholder Engagement. Previously represented 3G Capital in its $28 billion acquisition of H.J. Heinz alongside Berkshire Hathaway — the exact Buffett partnership-acquisition model Cohen says he's replicating. Also represented Pershing Square (Ackman) on the $54 billion Allergan bid, D.E. Shaw's engagement with Exxon Mobil, and Sachem Head Capital on multiple activist campaigns. His profile explicitly notes he advises on "complex transactions involving distressed companies and assets, including mergers, acquisitions, investments, and financings, as well as restructurings."
• Erica Hogan — M&A partner, shareholder activism specialist
• Robin Melman — Employment, Compensation & Benefits partner
• Melinda Anderson — Capital Markets counsel
• Rebecca Farrington — Antitrust partner (Washington, DC) — handles Hart-Scott-Rodino merger clearances
• Jonathan Polkes & Joshua Weedman — Litigation partners

Every structural prerequisite is already satisfied:

• Butterfly's merger authority: Plan Administrator Goldberg can sign a merger agreement with only Oversight Committee approval. No shareholder vote, no SEC proxy, no board vote needed. This entity can execute today.
• The 382 freeze has expired: September 29, 2025. No waiting period remains. The NOLs are ready to transfer.
• IEP's acquirability: Icahn controls 85–92% of units. One person's agreement is sufficient. No proxy fight, no hostile campaign.
• Icahn's margin loans: NAV-based triggers (immune to stock price attacks), maturity extended to July 2027, quarterly deleveraging in progress. Pre-engineered for a change of control.
• GameStop's investment policy: Revised March 2025 to authorize investments in private companies. Cohen can personally invest alongside GameStop. The board has already pre-authorized the type of transaction this represents.
• Brett's team: Operational since October 2020 — over five years of working together. They are not being recruited; they are in position.
• Teddy Holdings' trademarks: Filed 2021–2022, activated July 4, 2023. The brand infrastructure exists.

If the coordination traces back to autumn 2020 — when Cohen began buying GME shares in the same weeks Brett launched his succession plan — they have had over five years to draft merger agreements, negotiate the IEP premium, coordinate with margin loan lenders on change-of-control provisions, obtain 382(l)(5) tax opinions, and prepare SEC filings. Private M&A negotiations happen entirely behind closed doors until a definitive agreement is signed. Nothing needs to be public until announcement day.

Each phase enables the next. Butterfly creates the capital. IEP creates the operating infrastructure. The Hollow Men philosophy identifies the targets. The NOLs make every deal more profitable. And the machine, once built, is self-reinforcing.

The Case That Can't Be Filed: Why Character Is Evidence

SEC filings can tell you what's legally possible. They can't tell you what someone will choose to do when they don't have to. This section makes a case that can't be sourced to an 8-K.

There is a question at the heart of this thesis that no amount of tax code analysis or bankruptcy docket review can fully answer: why would Ryan Cohen include former BBBY shareholders if he didn't have to?

The tax argument is strong. Section 382(l)(5) provides the optimal NOL preservation pathway, and it requires former shareholders to own 50%+ of the new entity. But a sophisticated tax attorney could construct alternative structures — accepting the annual limitation under 382(l)(3), for example, or using the NOLs less efficiently but without the dilution of issuing shares to former BBBY holders. The tax code creates a powerful incentive to include shareholders. It doesn't create an absolute obligation.

So the question becomes: who is Ryan Cohen, and what would he do at the decision point?

The Evidence of Character

He named the company after his late father. Ted Cohen passed away in December 2019. Ryan Cohen registered Teddy Holdings LLC in August 2021 — seven months before buying into BBBY. The trademarks cover the exact product categories of BBBY's core business: bed linens, towels, blankets, shower curtains. Whatever Teddy Holdings becomes, it carries his father's name. People don't attach their father's legacy to something they intend to execute cynically.

He takes zero salary. Cohen's compensation at GameStop is 100% equity. His $35 billion compensation package only pays out if GameStop reaches $100 billion in market capitalization — a target that requires the stock to roughly quadruple. He doesn't win unless shareholders win. This isn't a gesture. It's a structural alignment of incentives that makes it mathematically impossible for Cohen to profit at shareholders' expense. His net worth is the share price.

He's building the thing Buffett built — and Buffett's mythology is shareholder loyalty. Burry explicitly said he sees Cohen becoming "the next Warren Buffett." Cohen redesigned GameStop's homepage to mirror Berkshire Hathaway's. Buffett's entire legend rests on one principle: he never betrayed his partners. The original Buffett Partnership letters promised transparency, aligned incentives, and long-term thinking. Sixty years later, Berkshire's annual meetings draw 40,000 people who hold the stock like a religious artifact. Cohen is building the same thing — and he knows the foundation of that mythology is trust. You don't build a Berkshire by burning the people who believed in you first.

He watched what retail loyalty looks like — and what it's worth. After the 2021 squeeze, GameStop's stock dropped 90% from its peak. The smart money left. Retail didn't. Millions of individual investors held through the drawdown, bought more on the way down, and DRS'd their shares — pulling them out of the DTCC entirely — because they believed Cohen was building something. That loyalty funded the $9 billion war chest. Every ATM offering GameStop executed was absorbed by retail investors who didn't flinch. You cannot buy that kind of shareholder base. You can only earn it — or destroy it.

Icahn at 89 is structuring a legacy, not a liquidation. Carl Icahn has spent sixty years as the most feared corporate raider in American history. He could liquidate IEP, distribute the proceeds, and retire. Instead, he's restructuring his margin loans, installing his son Brett as the operating successor, and positioning the empire for transformation. The Sargon Portfolio — named after an ancient king who united warring city-states — generated 26.8% annualized returns under Brett's management. Icahn isn't winding down. He's handing off. And the entity he's handing off to needs to be worthy of sixty years of work.

The documents say it's possible. The incentives say it's optimal. The character read says it's who these people are. None of these alone is proof. Together, they form the kind of convergence that a filing can't capture — and that drives the conviction behind this thesis.

The Logistics Backbone: Flexport & BBBY's Ghost

When BBBY's 800,000-square-foot DFW e-commerce distribution center went dark in 2023, one company moved in within five months: Flexport — the world's most advanced end-to-end supply chain platform.

The Warehouse That Didn't Stay Empty

Bradford Companies' DFW Industrial Q4 2023 report documented it plainly: "Bed Bath & Beyond placed its 800,000-SF space in Lewisville on the sublease market, and it was taken by Flexport five months later." Partners Real Estate confirmed: Flexport subleasing 799,460 sq. ft. of distribution space at 2900 South Valley Parkway — the same DFW Airport-adjacent facility that served as BBBY's e-commerce fulfillment center. The warehouse that once shipped sheets, towels, and home textiles to customers' doorsteps didn't change purpose. It changed tenants.

The Store Closures Tell the Story

GameStop is not shrinking by accident — it's deliberately dismantling its brick-and-mortar footprint at unprecedented speed. The numbers are stark: 590 U.S. stores closed in fiscal 2024. An additional 336 stores closed across Europe, 33 in Australia, 11 in Canada. Germany exited entirely. Italy sold. Ireland, Switzerland, Austria — gone. Canada and France put up for sale. In January 2026 alone, an estimated 295-470 additional U.S. stores shuttered. From a peak of 6,000+ global locations in the mid-2010s, GameStop has collapsed to roughly 3,200 — and falling fast, with the company promising "a significant number of additional closures" in fiscal 2025.

The conventional read: GameStop is dying. Digital downloads killed physical game retail. But there's another read — one that fits Cohen's playbook: GameStop is shedding the retail infrastructure it doesn't need to build the e-commerce infrastructure it does. Cohen did this at Chewy. He never opened physical stores. He built an e-commerce machine powered by logistics. Every closed GameStop store reduces overhead, terminates a lease, and concentrates the company's future on digital sales and fulfillment. And when you're pivoting from 3,200 brick-and-mortar stores to an e-commerce model — shipping physical products to customers' doors — you need a logistics backbone. You need warehouses, not storefronts.

The math is simple: GameStop spent $3.8 billion on net sales in fiscal 2024, down 27.5% year over year. Revenue is declining because physical game sales are declining. But if the "very, very, very big" acquisition transforms GameStop into a conglomerate that sells physical products — home textiles, consumer goods, the products of "hollowed out" American brands — then the company needs fulfillment infrastructure, not mall kiosks. And that infrastructure is already operational, 15 minutes from headquarters, run by a company that specializes in exactly this.

What Flexport Actually Is

Flexport isn't a trucking company. It's the full stack. Founded by Ryan Petersen in 2013, valued at $8 billion, backed by $2.3 billion in venture capital from Founders Fund (Peter Thiel), Andreessen Horowitz, MSD Partners (Michael Dell), SoftBank, and a strategic investment from Shopify (which now holds a 13% equity stake). The platform connects every step of the supply chain — factory floor to ocean freight to customs to warehousing to last-mile delivery to the customer's door. When Flexport acquired Shopify Logistics in May 2023, including Deliverr's 3-million-square-foot fulfillment network, it became the only company capable of offering a manufacturer a single platform from production to doorstep.

In August 2025, BlackRock partnered with Flexport to provide $250 million in supply chain financing through Flexport Capital, doubling their lending capacity. Since 2017, Flexport Capital has disbursed over $2 billion in financing — inventory loans, asset-based credit lines, tariff financing — all embedded directly in the logistics flow. This isn't just shipping. This is a financial ecosystem that funds, moves, and delivers physical goods.

The Chewy Parallel Is Structural

Cohen built Chewy by combining Amazon-level logistics with customer obsession in an underserved vertical. The competitive moat wasn't the website — it was the supply chain. Chewy could deliver 70-pound bags of dog food to your doorstep in two days because Cohen invested relentlessly in fulfillment infrastructure. A Teddy home textiles brand would need the exact same formula: tech-driven logistics + customer obsession in home goods. But building that infrastructure from scratch would take years and billions. Flexport already has it — and is literally sitting in BBBY's warehouse.

Flexport Doesn't Need To Be Acquired

Unlike IEP, Flexport doesn't need to be bought. It's privately held, positioning for an IPO, and valued at $8 billion. What it needs is a transformational anchor client — a major consumer brand that can drive massive volume through its platform. A Teddy/WestPoint Home partnership, backed by GameStop's $9 billion war chest and Cohen's e-commerce playbook, would be exactly that. Flexport provides the logistics backbone. GameStop provides the capital and brand. WestPoint Home provides the manufacturing. Teddy provides the identity. And the BBBY warehouse in Lewisville, Texas provides the physical infrastructure — as if nothing ever changed.

Ryan Petersen rejoined Founders Fund as a partner in July 2023 — Peter Thiel's venture firm, which has backed Flexport since its earliest rounds. Shopify, which owns 13% of Flexport, also invested $260 million via convertible note in January 2024. The investor web — Founders Fund, BlackRock, Shopify, MSD Partners — represents exactly the kind of institutional infrastructure that a combined GME/IEP/Teddy entity would want sitting behind its logistics partner.

Note: No direct personal or business relationship between Ryan Cohen and Ryan Petersen has been publicly confirmed. This section documents confirmed facts — Flexport's occupation of BBBY's warehouse, its capabilities, and strategic fit — rather than claiming an established connection. The infrastructure alignment may be coincidental. But the fit is remarkable.

The Short Squeeze Mechanics

This is where the thesis goes nuclear. In January 2021, GameStop's short interest reached approximately 140% of total shares outstanding — more shares shorted than actually existed. Measured against the free float (shares actually available for trading, excluding insider holdings), FINRA data showed short interest as high as 226%. The SEC's own staff report confirmed GameStop was the only stock they had ever observed with short interest exceeding shares outstanding. Goldman Sachs noted this had only happened 15 times in the prior decade across all equities. BBBY was similarly one of the most heavily shorted stocks in the market. Those positions may still exist — and a merger would force them to close.

What Happens to BBBY Shorts When "Dead" Shares Come Back to Life?

Now imagine a merger is announced where every former BBBY share is entitled to a fraction of a GME share. Suddenly:

• Every open short position in BBBY has a real obligation — the short seller now owes the lender GME shares (the merger consideration), not worthless BBBY shares
• Every naked shortSelling shares you haven't actually borrowed — essentially creating phantom shares. This is technically illegal in most cases but has been documented extensively in both GME and BBBY. that was never resolved now has deliverable securities owed to someone
• Every total return swapA derivative contract where one party pays the "total return" of an asset (including price changes) to another party. Used by hedge funds to take economic short positions without appearing in reported short interest data. The Archegos Capital collapse in 2021 revealed billions hidden in these instruments. that was closed at zero now has a reopened obligation

The Hidden Exposure

The reported short interest for both GME and BBBY represented only a fraction of total exposure. Community research and public data have documented significant hidden exposure through:

• Total Return Swaps (TRS): The Archegos collapse proved billions in synthetic short exposure can hide in swap books, invisible to public reporting
• Married Puts / Synthetic Shorts: Options strategies creating short exposure without appearing in short interest reports — documented extensively in both stocks
• Fails-to-Deliver (FTDs): Persistent, massive failures to deliver shares, suggesting more shares were "sold" than actually existed
• ETF Arbitrage: Both stocks were components of the XRT ETF, which was itself one of the most heavily shorted ETFs

The Cascade Effect

A merger announcement would trigger simultaneous pressure from multiple directions:

1. BBBY shorts must acquire GME shares to cover their converted obligations
2. GME shorts must buy to cover as the stock rises on acquisition news
3. Swap counterparties must hedge their reopened exposure
4. Market makers must delta-hedge as options activity explodes
5. Convertible note holders convert to equity as price rises past conversion prices
6. Warrant holders exercise at $32, bringing ~$1.9B in new cash to GameStop

All of this is concentrated buying pressure on a single security with a hard ceiling of 1 billion authorized shares. The shorts who thought BBBY going to zero was pure profit would discover they funded their own destruction — Cohen used the volatility they created to raise $9 billion in cash, and now that cash acquires the one entity that forces them to close.

Phantom Shares & The Everything Squeeze

The Butterfly merger doesn't just squeeze GameStop. It detonates obligations that have been accumulating across the financial system since 2008 — phantom shares that were never delivered, short positions that were never closed, and warrant obligations that can't be hidden.

Phantom Shares & The Scale of the Problem

The 2021 squeeze exposed something the financial system had long preferred to ignore: more shares of certain stocks were circulating than had ever been issued. GameStop's 140% short interest meant shares were being re-lent and re-shorted in chains, with each link creating a new obligation but no new underlying share. The SEC's staff report acknowledged this mechanic explicitly. But GameStop wasn't unique — it was simply the most visible example of a systemic infrastructure failure.

Fannie Mae and Freddie Mac weren't just victims of the 2008 mortgage crisis. They were victims of the same mechanism: naked short selling. A document submitted to the SEC titled "The Counterfeiting of Shares of Fannie Mae and Freddie Mac"[95] stated it plainly: the GSEs' shares were "counterfeited and deliberately manipulated" and that "known ownership of the GSEs shares exceeded the number of shares that were available." Data from the New York Stock Exchange showed that before the 2008 crash, institutional owners held 113% of all issued and outstanding shares of Freddie Mac and Fannie Mae — and that didn't even include individual investors. More shares were sold than ever existed.

In July 2008, the SEC issued an emergency order specifically banning naked short sales of Fannie, Freddie, and 17 other financial firms — including Lehman Brothers, Goldman Sachs, Merrill Lynch, and Morgan Stanley. But researcher Susanne Trimbath documented that despite the ban, failures to deliver continued to accumulate. She calculated that FTDs explained between 30% and 70% of the variation in closing prices for Lehman Brothers and Bear Stearns. Bank of America's annual proxy meeting counted 130% of its shares voted[95] — 30% more votes than shares outstanding. The phantom share problem wasn't limited to a few stocks. It was systemic.

Counterfeit Tokenized Shares: The FTX Vector

Beyond traditional naked shorting, a new mechanism for creating phantom shares emerged through crypto platforms. FTX offered "tokenized stock tokens" for GME, AMC, Tesla, and 33 other equities, claiming each token was "backed 1:1 with actual shares, custodied by FTX Switzerland." Blockchain records show 10 million Wrapped GameStop tokens in circulation on Ethereum — yet no corresponding FTX Switzerland institutional holdings appeared in SEC filings or on NASDAQ's institutional ownership records.[80]

FTX's own terms of service contradicted its website, stating that "buyers of the Fractional Stocks have neither a claim to delivery of the underlying." CM Equity AG, the listed custodian, terminated its relationship with FTX in December 2021 — meaning FTX misrepresented custody arrangements for all of 2022. FTX's leaked balance sheet showed only Robinhood (HOOD) shares — no documentation of the 36 tokenized stocks it listed. Alameda Research, FTX's hedge fund arm, purchased 2.5 million Wrapped AMC tokens on the day of AMC's largest price spike.

As Chartered Financial Analyst Peter Hann noted: tokenized shares gave brokers a phantom "locate" — they could point to millions of tokens as evidence shares existed, reducing the cost to borrow and enabling further short selling against stocks that were already oversold. The timing is damning: FTX launched its tokenized GME and AMC stocks on January 27, 2021 — the exact day of GameStop's largest price spike during the original squeeze. When FTX collapsed in November 2022, these phantom locates evaporated — but the short positions they facilitated did not. Cohen terminated GameStop's gift card partnership with FTX two days before FTX filed for bankruptcy — suggesting awareness of the platform's integrity issues.[80]

The FTX tokenized stock scheme represents a vector of phantom share creation that operated entirely outside the traditional securities settlement infrastructure. Unlike naked shorts or failed deliveries — which at least leave traces in the DTCC's systems — crypto-based counterfeit shares existed on a separate blockchain, invisible to regulators, proxy tabulators, and transfer agents. Ten million tokens claiming to represent ten million shares, with no evidence the underlying shares ever existed.

Now those same Fannie/Freddie shares — delisted from the NYSE in 2010, relegated to OTC pink sheets, trading at ~$8 (from pre-crisis highs of $74) — are about to be relisted on a major exchange as part of the IPO/reprivatization. FNMA currently has a market cap of approximately $9 billion, and the administration is targeting a combined $500 billion valuation. That's a ~27x increase in value for shares that may still carry unresolved phantom share obligations from 2008. And the man now overseeing that reprivatization — Bill Pulte, Trump's FHFA director — embedded himself in the BBBY investor community in 2023, told them Cohen was "up to something," and still holds GameStop stock. His full role in the network is explored in Section 21.

The Contagion Mechanics: From Squeeze to Cascade

Here's where the phantom share problem becomes bigger than any single stock. The Butterfly thesis proposes a GameStop short squeeze generating massive capital gains tax revenue. But what if the squeeze doesn't stay contained to GameStop?

The mechanics of a market-wide squeeze cascade work like this:

Step 1: The Trigger. A single stock — GME — squeezes as the Butterfly merger forces shorts to close. This is the controlled detonation. Shorts covering GME need cash. They begin liquidating other positions to meet margin calls.

Step 2: Margin Contagion. The same institutions shorting GME are likely short many other heavily-shorted stocks simultaneously. This isn't speculation — it's how portfolio construction works at hedge funds. When GME forces a margin call, the fund doesn't just cover GME. It covers everything or faces liquidation. In January 2021, Melvin Capital's 49% loss in a single month wasn't just from GME — it was from the cascade of positions unwinding across their entire portfolio.

Step 3: Correlated Covering. As multiple funds begin covering simultaneously, every heavily-shorted stock experiences buying pressure. If GME squeezes, and the same short sellers are also short Tesla, IEP, Fannie/Freddie, and dozens of other positions — all those shorts begin covering at once. The buying pressure feeds on itself. In 2021, the entire "meme stock basket" moved in lockstep: GME, AMC, BBBY, KOSS, BB — because the same institutions were short all of them.

Step 4: The Liquidity Vacuum. As shorts scramble to buy, market makers widen spreads and pull liquidity. This is the "everything squeeze" — where forced covering creates artificial demand across the market while liquidity evaporates. Prices rise not because of fundamentals but because short sellers are buying anything and everything they need to survive. The assets being sold to raise cash (typically safe-haven assets like treasuries and blue chips) decline, while the assets being bought (shorted stocks being covered) surge.

Step 5: The Tax Harvest. Every dollar of short loss is a dollar of long gain on the other side. And short-term capital gains are taxed at ordinary income rates — up to 40.8% federal. If the cascade generates $100B, $200B, $500B in taxable gains across the market, the tax revenue doesn't just come from GameStop. It comes from every position that unwinds. The SWF funding mechanism isn't one squeeze — it's the entire cascade.

The political implications are staggering — and they're the subject of the next act. For now, note the mechanic: every dollar of short loss is a dollar of long gain, taxed at up to 40.8% for short-term positions. The larger the phantom share problem, the larger the tax windfall. And if that windfall happens to coincide with the launch of America's first sovereign wealth fund, the narrative writes itself.

The Relationship Map

The web of confirmed connections can be visualized as a network, with Trump at the political nexus and the SWF as the financial nexus:

Solid gold lines indicate confirmed personal or business relationships. Dashed blue lines indicate inferred connections based on documented evidence. Green lines indicate sovereign wealth fund equity pathways (confirmed for Intel/MP Materials; speculative for others).

The New Plumbing: How Blockchain Settlement Kills Naked Shorting

The preceding sections document how phantom shares are created — through naked shorting, FTD rolling, total return swaps, and the counterfeit tokenized stocks FTX used to fabricate phantom locates. But documenting the disease is different from curing it. The cure requires changing the plumbing itself — and that transition is happening right now, on the same timeline as everything else.

The SEC Chairman Said the Quiet Part Out Loud

In early 2026, SEC Chairman Paul Atkins went on Fox Business and described the current settlement system's fundamental flaw in plain language: public companies today "often do not know who actually owns their shares or where those shares are held." Then he described the fix: if securities lived on a blockchain, "the ownership structure and asset attributes will be highly transparent." He described tokenized settlement achieving "T+0" — instant, atomic settlement where the share and the cash move simultaneously, eliminating the settlement gap that allows failures to deliver to accumulate.

This is the head of the SEC describing, in plain language, the exact infrastructure failure this thesis identifies — and endorsing the exact technology that fixes it.

Three Parallel Tracks, One Destination

There isn't one initiative moving securities toward blockchain. There are three — legislative, regulatory, and market infrastructure — all converging on the same H2 2026 window.

Track 1: Legislative — The CLARITY Act

H.R. 3633, the Digital Asset Market Clarity Act of 2025, passed the House 294-134 in July 2025 with strong bipartisan support. It provides the comprehensive legal framework: defining digital commodities, clarifying SEC and CFTC jurisdiction, establishing compliance pathways for exchanges and broker-dealers. Section 305 explicitly allows brokers, dealers, and exchanges to use blockchains for books and records requirements. Section 507 mandates a joint SEC-CFTC study on "financial market infrastructure improvements" including whether new rules are needed to facilitate tokenized securities. The bill also includes the Anti-CBDC Surveillance State Act (Title VI), prohibiting a central bank digital currency — pushing the infrastructure toward decentralized blockchain rather than government-controlled digital currency.

The bill is currently stalled in the Senate over stablecoin yield disputes — the banking lobby spent $56.7 million fighting provisions they fear would cause deposit flight to crypto platforms. But Treasury Secretary Bessent is pushing for spring passage, the White House is actively mediating between Coinbase, Ripple, and the banking industry, and crypto proponents want the bill signed before the 2026 midterms. The CLARITY Act doesn't need to pass for tokenized settlement to begin — but it provides the comprehensive legal architecture that makes the transition permanent.

Track 2: Regulatory — The SEC/DTCC Pilot

In December 2025, the SEC's Division of Trading and Markets issued a no-action letter authorizing the Depository Trust Company to launch a tokenized securities pilot. The pilot launches in the second half of 2026, runs for three years, and covers:

• Russell 1000 securities — which includes GameStop
• U.S. Treasury securities
• ETFs tracking major indices (S&P 500, Nasdaq-100)

Under the program, DTC participants can choose to have their security entitlements recorded on a distributed ledger rather than DTC's traditional centralized system. The resulting "tokenized entitlements" move directly between registered wallets on approved blockchains, without DTC intermediating each transfer. DTC's LedgerScan software tracks all token movements and maintains the official record of ownership. This doesn't need CLARITY to pass — it's happening under existing SEC authority through the no-action letter framework.

Track 3: Market Infrastructure — NYSE and Nasdaq

On January 19, 2026, the NYSE announced it is developing a platform for 24/7 trading of tokenized stocks and ETFs with instant on-chain settlement — the first time in the exchange's 233-year history that trades would not be limited to market hours. Tokenized shares will remain fully fungible with traditional securities: same voting rights, same dividends, same legal and economic attributes. Separately, Nasdaq filed a rule change on January 20, 2026, to enable trading securities in tokenized form during the DTC pilot, with first token-settled trades targeted for Q3 2026. Both platforms are pending SEC approval.

Three tracks. Same destination. Same timeline: H2 2026.

Why Blockchain Kills Naked Shorting — Mechanically

The current settlement system has four features that enable phantom share creation. Blockchain-based settlement eliminates every one of them:

The implications are stark: in a fully tokenized settlement system, the entire infrastructure of phantom share creation — naked shorts, FTD rolling, rehypothecation, synthetic locates — becomes mechanically impossible. Not illegal (it's already illegal). Not discouraged. Impossible. The code won't execute a transaction for a token that doesn't exist in the seller's wallet.

The Sequencing Logic: Clean the Register, Then Lock the Door

The community speculation that blockchain infrastructure needs to exist before or simultaneously with the merger is strategically coherent. The argument is simple: the squeeze is the cleanup event that forces every phantom obligation to surface and be resolved. But cleanup without reform is temporary — the system that created the phantoms would simply create new ones the next day. Tokenized settlement is the reform that makes the cleanup permanent.

The timeline alignment supports this reading:

• H2 2026: DTCC tokenized securities pilot launches. Russell 1000 securities — including GameStop — become eligible for on-chain settlement.
• Q3 2026: Nasdaq targets first tokenized trades under the pilot program.
• Summer 2026: The convergence window for the Butterfly merger, as outlined in the preceding sections.

If the merger closes in June-July 2026, the post-merger entity could immediately opt into the DTCC tokenization pilot — becoming one of the first major companies to settle on blockchain. The squeeze forces every phantom share obligation to surface and be resolved through the old settlement system, where those obligations exist. Then the clean entity migrates to the new system, where phantom obligations can't be created. The squeeze is the bridge event: it burns the phantom shares in the old world, and the company that emerges crosses into the new world where phantoms can't exist.

GMERICA: The Squeeze That Funds a Nation

The preceding sections establish the corporate architecture — a bankruptcy shell with billions in NOLs, a $9B war chest, a conglomerate target, a logistics backbone, and a consumer brand identity. But one question remains: who else benefits from this structure? The answer connects meme stocks to the most ambitious fiscal project in American history.

The biggest unsolved problem with Trump's sovereign wealth fund is where the money comes from. The United States has run a budget deficit for all but five of the last fifty years. You can't build a sovereign wealth fund from surplus that doesn't exist. Unless you create the surplus.

⚠️ Speculation Warning: This section ventures into explicitly theoretical territory. It connects confirmed facts — Cohen's Trump support, the GMERICA trademark, the sovereign wealth fund executive order, SpaceX's M&A activity, and the mechanics of short squeeze taxation — into a speculative framework. What follows is a theory about how these threads could connect, not a claim that they do.

The Funding Problem Everyone Admits Exists

On February 3, 2025, Trump signed an executive order directing Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to develop a plan for a U.S. sovereign wealth fund within 90 days.[96] The stated goals: "promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations." Bessent promised it would be "up and running within 12 months." But when asked where the money would come from, no one had a clear answer. Trump mentioned tariff revenue and "other intelligent things." Analysts noted the U.S. runs a $1.9 trillion annual deficit. Norway's fund was built on oil. Saudi Arabia's on oil. The U.S. doesn't have a surplus commodity to convert into sovereign capital.

Or does it?

What If The Surplus Is Hiding In Plain Sight?

Consider the mechanics of the 2021 GameStop short squeeze. Hedge funds lost $19.75 billion in January alone. Melvin Capital lost 49% of its assets ($6.8 billion). Citron Capital lost 100% of its GME positions. D1 Capital Partners lost 20% of $20 billion.[97] The total damage to short sellers across all meme stocks ran into the tens of billions. But here's what no one talks about: the other side of every short seller's loss is someone else's gain. And gains are taxable.

When retail investors sold GME at $300, $400, $500 — those profits generated short-term capital gains taxed at ordinary income rates. For high earners, that's 37% federal plus 3.8% Medicare surtax — 40.8% to the federal government. When institutions like BlackRock (which held ~13% of GME at peak) or Senvest Management (which made $700 million) realized gains, those generated corporate income tax or fund-level pass-through income. The 2021 squeeze alone generated billions in taxable events at the highest marginal rates.

Now scale that up. What if the Butterfly merger triggers a squeeze that makes 2021 look like a warm-up?

The Math of a Manufactured Surplus

If the Butterfly merger forces covering of short positions on both GME and resurrected BBBY equity simultaneously — as Section 16 describes — and the resulting squeeze drives a combined market cap above $100 billion (Cohen's stated target), the capital gains taxation alone could be staggering. Consider:

But the tax revenue is only the initial capitalization event. The more powerful mechanism is what happens after. Once the sovereign wealth fund exists — seeded by squeeze tax revenue, Fannie/Freddie warrant equity, and tariff income — it begins generating investment returns. Norway's Government Pension Fund Global has generated over $1.7 trillion in cumulative returns since inception. Singapore's GIC averages 6.9% annualized over 20 years. A U.S. sovereign wealth fund, invested across the domestic economy it just catalyzed, would compound on a base of American equities, real estate, and infrastructure. Those returns can be directed toward national debt reduction, infrastructure spending, or reinvestment — creating a virtuous cycle where the fund's growth generates revenue that reduces the deficit without raising taxes or cutting spending. The SWF doesn't just need squeeze revenue to exist. It needs squeeze revenue to start existing. After that, compound returns do the work.

GMERICA: The Trademark That Became a Mission Statement

On August 23, 2021 — months after the first squeeze proved the concept — GameStop filed a trademark for "GMERICA."[98] The filing covers clothing, toys, games, and retail services. The community treated it as merchandise branding. But read the name again: GME + AMERICA. What if GMERICA was never about t-shirts?

Cohen endorsed Trump publicly on July 13, 2024. Three days later, he posted "TRUMP" 665 times on X. After the election, he posted "Trump has now won 3 elections in a row." This isn't passive political preference — it's aggressive, public alignment with a president whose signature economic proposal is a sovereign wealth fund that no one knows how to fund.

The SpaceX Convergence

On February 3, 2026 — exactly one year to the day after Trump's SWF executive order — SpaceX acquired xAI in the largest merger involving a private target in history. Combined valuation: $1.25 trillion.[99] SpaceX is preparing for a mid-2026 IPO that could raise $50 billion at a $1.5 trillion valuation. The investors overlap with Cohen's orbit: Founders Fund (Thiel), who backs Flexport and has deep ties to the Trump administration. The timing is notable.

What if the sovereign wealth fund's "great national endeavors" include a stake in SpaceX's IPO? And what if the capital to take that stake comes from the tax revenue generated by the greatest short squeeze in market history? The mechanism would be elegant: abusive short sellers — who bet against American companies, destroyed jobs, and hollowed out iconic brands — fund America's entry into the space economy through the involuntary generation of taxable capital gains events.

The Political Narrative Writes Itself

Imagine the announcement: "American retail investors, who stood up against Wall Street predators who were destroying American businesses, have generated more tax revenue for the United States government than any single market event in history. That revenue will seed America's sovereign wealth fund, investing in the future — in space, in AI, in American manufacturing. The short sellers bet against America. America won."

Cohen gets his conglomerate. Trump gets his fund. Retail investors get their squeeze. The tax revenue flows to Treasury without a single new tax law. Short sellers — the perfect political villain — pay for all of it. And "GMERICA" stops being a trademark for t-shirts and becomes shorthand for the event that changed American capital markets forever.

Trump Accounts: The 401(k) Revolution for Generation Alpha

And then there's the piece no one saw coming — the mechanism that turns a one-time squeeze into a permanent structural bid for American equities.

On July 4, 2025, Trump signed the One Big Beautiful Bill Act into law. Buried inside was Section 530A: "Trump Accounts."[100] Every U.S. citizen born between 2025 and 2028 receives a $1,000 Treasury-funded investment account. Any child under 18 with a Social Security number is eligible for an account with up to $5,000 in annual contributions. Employers can contribute $2,500 tax-free. And every dollar — by law — must be invested in broad U.S. equity index funds tracking the S&P 500, with fees capped at 0.1%. No stock picking. No crypto. No alternatives. Just American equities, compounding from birth.

Contributions open July 4, 2026 — America's 250th birthday. Over 500,000 families filed to open accounts in the first three days of the 2026 tax filing season alone.[100] Treasury Secretary Bessent called them "the defining policy of America's 250th anniversary."

Then, on December 2, 2025, Michael and Susan Dell pledged $6.25 billion[101] — one of the largest single charitable commitments in American history — to seed an additional 25 million accounts with $250 each for children under 10 who weren't eligible for the federal grant. The Dell gift, channeled through the nonprofit Invest America, will reach nearly 80% of children in the eligible age group across 75% of U.S. ZIP codes.

But what if the sovereign wealth fund is more than a pile of money? What if it's the connective tissue of an entirely new kind of American corporate architecture — one modeled on a structure that rebuilt Japan after World War II? That's the subject of the next section.

The American Keiretsu

Japan rebuilt its economy after World War II through interlocking corporate networks called keiretsu. The structure Cohen appears to be building follows the same blueprint — adapted for American capital markets and anchored by a sovereign wealth fund.

The Architect's Inner Circle: Trump as the Nexus

A keiretsu is a network of interlocking companies across different industries, bound together by cross-shareholding, a central bank, and long-term relationships. Each of Japan's Big Six keiretsu encompassed a bank, a trading company, an insurance company, a steel company, and dozens of other firms. They competed externally but cooperated internally. The cross-shareholdings insulated members from hostile takeovers. The group bank provided patient capital. And the trading company coordinated supply chains across the entire network.

Now imagine an American version — not family-controlled zaibatsu, but a sovereign keiretsu: a network of major American companies bound together not by family ties but by a shared characteristic: they were all targets of abusive short selling. The keiretsu's origin story isn't postwar reconstruction. It's post-short-seller reconstruction.

But a keiretsu doesn't self-assemble. In Japan, each one had a central coordinating force — a bank, a trading company, a family patriarch. In this theoretical American version, the coordinating force is political rather than financial. And the nexus is one person: Donald Trump.

Consider the confirmed relationships:

In Japan, keiretsu members coordinated through the presidents' club — a regular meeting of the CEOs of member companies. The American equivalent doesn't need a formal club. It has something more powerful: a political alliance around a president who has explicitly stated he wants to build a sovereign investment vehicle, who has surrounded himself with the exact people who run the companies that would constitute its portfolio, and who has a political base that would celebrate the destruction of short sellers as an act of patriotic justice.

Trump wanted Icahn for Treasury Secretary. He made Musk the most powerful unelected person in government. Cohen posts "TRUMP" 665 times. Thiel's VP pick runs the country. These aren't distant acquaintances. These are the inner circle. And the keiretsu theory suggests they don't need to coordinate formally — they just need to align on the same destination, each traveling their own path, knowing that the SWF is the structure that binds them all together when they arrive.

The Global Sovereign Web: Mutual Investment as the Architecture of Peace

The American keiretsu theory, as described above, is a domestic structure — American companies, bound by a U.S. sovereign wealth fund, coordinated through American political relationships. But sovereign wealth funds don't invest in isolation. They invest in each other's ecosystems. And the web of sovereign capital flowing into the Stargate infrastructure reveals something larger: a framework where the nations that invest together develop mutual interests in each other's stability — a structure that makes conflict economically irrational.

Consider who is already co-investing in the same infrastructure:

⚠️ Evidence Note: Sultan Almaadeed's role as a global direct investor at QIA is confirmed through Bloomberg, SEC filings (Alkuri Global Acquisition Corp), Equilar executive records, and Gulf Times reporting. His QIA portfolio included SoFi, Palantir, Canary Wharf, Fairmont–Accor, and UASC–Hapag-Lloyd. The photo of Almaadeed with Ryan Cohen has circulated in the GameStop investor community. While Almaadeed's QIA credentials are publicly documented, the specific context and nature of his relationship with Cohen have not been publicly confirmed by either party.

The Peace Dividend: Why Mutual Investment Prevents Conflict

The logic is straightforward: when Country A holds billions in Country B's infrastructure, attacking Country B means destroying your own assets. War becomes economically irrational when your sovereign wealth is embedded in your adversary's economy. This is the same principle that kept the EU's core members at peace for 80 years — France and Germany jointly controlling coal and steel production made industrial war between them self-defeating. The Stargate model replaces coal and steel with AI chips and data centers.

GMERICA as Global Narrative

If the American keiretsu thesis holds — and the sovereign wealth fund is seeded by the short squeeze, capitalized by Fannie/Freddie warrants, and anchored by Intel/SpaceX equity — then the fund doesn't just invest domestically. It co-invests with sovereign partners. And each co-investment creates a bilateral thread of mutual interest that makes the relationship more stable, more durable, and more resistant to political disruption.

The narrative shifts from "America First" (zero-sum, adversarial) to "America Together" (positive-sum, collaborative). "GMERICA" — GME + AMERICA — becomes not just a trademark for a domestic short squeeze narrative, but a framework for how American sovereign capital partners with the world's wealthiest sovereign investors to build shared infrastructure that benefits everyone and can be destroyed by no one.

The Gulf states need to diversify away from oil. Japan needs to revitalize its technology sector. The United States needs to onshore manufacturing and fund a sovereign wealth fund without raising taxes. Nvidia needs chip fabs. Intel needs capital. OpenAI needs data centers. SpaceX needs launch contracts. Each node in the global sovereign web has something the others need. The sovereign wealth fund — if it materializes — becomes the clearinghouse for these mutual interests, converting adversarial competition into collaborative investment.

This framework is explicitly theoretical. No sovereign wealth fund has publicly stated that mutual investment is designed as a peace mechanism, and the investment pledges cited above are frequently characterized by analysts as aspirational rather than binding commitments. The Cohen–Sheikh Sultan connection is community-documented but not independently verified. However, the structural logic — that nations with mutual financial exposure have reduced incentive for conflict — is well-established in international relations scholarship and visible in the history of European integration.

The Infrastructure Web

The corporate thesis requires a corporate architecture. The political thesis requires political alignment. Here is the evidence — confirmed, public, and documented — that the alignment already exists.

"Power to the Players" — The White House Tips Its Hand

On October 26, 2025, something happened that would have been inconceivable in any prior administration. GameStop posted a mock "executive order" on X declaring the console wars over. The official White House account quote-tweeted it with an AI-generated image of Trump dressed in Master Chief's Spartan armor, holding an energy sword, captioned: "Power to the Players" — GameStop's actual slogan. The post received 45.4 million views. The Trump administration's Rapid Response account posted another image of Trump shaking hands with Master Chief in the Oval Office, captioning it: "NUMBER 9: President Trump presides over the end of the 20-year Console Wars." GameStop responded with Trump as Master Chief and JD Vance as Cortana. The White House later issued a statement claiming Trump is "hugely popular" with gamers and is the only leader "fully committed to giving power to the players."

GME stock surged 7% in premarket trading the following Monday.

Read that again. The official White House — the seat of the U.S. government — used GameStop's trademarked slogan in a promotional exchange with a publicly traded company whose CEO has been aggressively endorsing the President. In what universe does the White House social media team engage in a meme exchange with a meme stock company unless someone, somewhere, wants that association to exist?

And the web of aligned interests doesn't stop at the White House door.

Bill Pulte, Fannie/Freddie & the Housing Backbone

The man now overseeing the Fannie/Freddie reprivatization has a direct connection to this story.

Bill Pulte, grandson of PulteGroup homebuilding founder William Pulte, became a genuine presence in the BBBY investor community in 2023. He didn't just observe from a distance — he showed up. He appeared on livestreams with BBBY content creators, held events for shareholders, and gave hope to a community that most of the financial establishment had written off. He said he was "captivated by the people and motives of the incredible BBBY community," and when asked about Cohen's Teddy trademark, responded: "He's up to something. There's something that's caused him to behave the way he's behaved with this situation. They're not going to put that in an SEC filing."[93] Rolling Stone reported that Pulte frequently tweeted to and about Cohen[93], and that BBBY investors came to see Pulte as a source of encouragement during the darkest chapter of the saga. His financial disclosures show he still owns GameStop stock.

Then, on January 16, 2025, Trump named Pulte as his nominee for director of the Federal Housing Finance Agency (FHFA). He was confirmed by the Senate in March. Pulte immediately appointed himself chairman of both Fannie Mae and Freddie Mac — the government-sponsored enterprises that back roughly 70% of all U.S. mortgages and have been in government conservatorship since the 2008 financial crisis.

A photo surfaced of Trump, Cohen, and Pulte together[94] — the GameStop CEO, the FHFA director, and the President of the United States — three people whose stories converge through the BBBY bankruptcy, meme stock culture, and now federal housing policy. The man who embedded himself in the BBBY community now controls the $13 trillion mortgage market.

The housing node of the network is now visible: WestPoint Home (Icahn/IEP) makes the towels, sheets, and bedding. Teddy Holdings brands them. GameStop/Flexport ships them to your door. And Fannie/Freddie — overseen by the man who told the BBBY community "he's up to something" — finances the home you put them in. It's end-to-end: from the mortgage to the mattress.

The housing node connects to capital through another thread — one of the richest people on Earth.

The Michael Dell Node — Capital, Logistics & Icahn's Old Rival

Michael Dell, the 10th-richest person in the world ($151B net worth), connects to this web through multiple threads:

That Intel deal — the government converting grants into equity — is worth examining in its own right. Because it reveals the mechanism through which all of this could actually fund the deficit.

The Down Payment Is Already Made: Strategic Equity as Deficit Weapon

Here's what most people missed: the sovereign wealth fund isn't theoretical anymore. It's already operating.

On August 22, 2025, the Trump administration converted $8.9 billion in CHIPS Act grants into a 9.9% equity stake in Intel — giving the U.S. government direct ownership of the only American company manufacturing advanced chips on U.S. soil. White House National Economic Council Director Kevin Hassett said it explicitly: "It's like a down payment on a sovereign wealth fund." He then added: "The government's stake in Intel is part of a broader strategy to create a sovereign wealth fund that could include more companies."

This is not a hypothetical. The U.S. government is already taking equity positions in strategic companies. The precedent is set. And the model is clear: convert government spending into equity ownership, then use that equity as the foundation for a sovereign fund. The Pentagon took a $400M equity stake in MP Materials (the only U.S. rare earth producer) under the Defense Production Act, becoming its largest shareholder with a potential 15% stake. That investment "crowded in" $1B in private financing from JPMorgan and Goldman Sachs.

Now extrapolate this model to the keiretsu:

Trump pledged "many more cases" like Intel. Hassett said the SWF is "starting to look like" a reality. The model isn't hypothetical — it's already being implemented, company by company, stake by stake. The question isn't whether the U.S. will have a sovereign wealth fund. It's whether the fund's capitalization event — the big bang that seeds it with hundreds of billions in a single moment — happens to coincide with a certain short squeeze, a certain IPO, and a certain birthday party on July 4, 2026.

The Warrant Weapon: How Units Expose Phantom Shares and Trap Short Sellers

In September 2025, GameStop announced something that initially puzzled Wall Street: a special dividend distributed not in cash, but in warrants. Each shareholder of record as of October 3, 2025 received one warrant for every ten shares held — approximately 59 million warrants total, each exercisable at $32.00 per share, expiring October 30, 2026. The warrants trade separately on the NYSE under the ticker GME WS. If fully exercised, they generate up to $1.9 billion in gross proceeds — earmarked for "general corporate purposes, including investments consistent with GameStop's Investment Policy and potential acquisitions."[73]

On the surface, this is a creative capital-raising mechanism that avoids the shareholder dilution backlash of ATM offerings. But the warrant dividend does something far more consequential than raise cash. It creates a second layer of obligation for every short seller.

This is the same mechanism BBBY used with its March 2023 reverse split vote — forcing the system to account for every share in existence. The warrant dividend functions as a second shareholder census, except this one is even harder to hide from: warrants are separately tradable securities with their own CUSIP number, their own order book, and their own settlement obligations. You can internalize a phantom share on your books. You cannot internalize a phantom warrant that trades independently on the NYSE.

The Expiration Clock: October 30, 2026

The warrant expiration date is not arbitrary. October 30, 2026 falls after the Summer 2026 convergence window (SpaceX IPO, Fannie/Freddie privatization, July 4th anniversary) but before the end of the fiscal year. If the Butterfly merger triggers a squeeze that drives GME above $32, every warrant becomes in-the-money. Every warrant exercised generates $32 in cash proceeds for GameStop — up to $1.9 billion more in acquisition capital, on top of the existing $9 billion. The warrants are Cohen's reload mechanism: squeeze capital that converts into acquisition capital on a pre-set timeline.

Computershare Trust Company, N.A. serves as the warrant agent — the same Computershare that retail investors have used for direct registration of shares (DRS), and the same transfer agent infrastructure that could process a future Butterfly merger distribution. The plumbing is unified.

Units Across the Keiretsu: A Pattern, Not a Coincidence

GameStop's warrant structure doesn't exist in isolation. Look across the web of connected entities:

The pattern across all four: layered securities that create multiple obligation surfaces for short sellers while providing reporting shields and capital flexibility for insiders. Common stock is one layer. Warrants are a second. Convertible notes are a third. Preferred instruments are a fourth. Each layer multiplies the complexity of maintaining a short position and creates additional exposure points where phantom obligations can be detected, quantified, and exploited.

In IEP's case, the MLP unit structure serves another purpose entirely: if GameStop acquires IEP, the acquisition would involve purchasing depositary units, not common stock. The tax treatment of MLP units in a change-of-control transaction — particularly for a unitholder like Icahn who holds 86% — creates unique structuring opportunities for both buyer and seller. The K-1 tax treatment that passes through to unitholders could interact with GameStop's NOL shields in ways that multiply the tax efficiency of the combined entity.

The Nvidia Node: AI Infrastructure Meets Industrial Renaissance

Every node in the keiretsu has a function: Flexport moves goods, IEP provides operating businesses, Butterfly provides the tax shield, SpaceX provides the IPO spectacle. But there's one entity whose role spans nearly every connection in the web — and whose $500 billion U.S. manufacturing commitment makes it the largest single private investment in American infrastructure in history.

The geographic clustering is striking. Nvidia's supercomputer factories are being built in Houston and Dallas, Texas. GameStop's headquarters: Grapevine, Texas (DFW Metroplex). Flexport's warehouse: Lewisville, Texas (DFW Metroplex). All three sit within a 30-mile corridor adjacent to DFW International Airport. TSMC's chip fabrication: Phoenix, Arizona. Intel's government-backed fabs: also Arizona. The physical infrastructure for the AI-powered American industrial renaissance is being concentrated in two states — Texas and Arizona — with the consumer goods arm (GameStop/Teddy/Flexport) and the chip manufacturing arm (Nvidia/TSMC/Intel) sharing the same metropolitan corridor.

How Nvidia Connects to the Squeeze

Nvidia's role in the keiretsu isn't about GameStop directly — it's about creating the economic environment in which the squeeze generates maximum tax revenue. Every dollar Nvidia invests in U.S. manufacturing creates jobs, generates supplier contracts, and produces economic activity that inflates the tax base. Every Stargate data center creates demand for Intel chips (manufactured in government-backed fabs) and energy (potentially from IEP's CVR Energy). The AI boom produces the corporate profits that the SWF's equity stakes can capture — and the individual wealth creation that produces capital gains tax revenue when investors realize profits.

More directly: Nvidia's $5 billion Intel investment followed the government's $8.9 billion equity stake. The government's crowd-in model works because companies like Nvidia see the strategic logic and pile in. If the SWF takes equity stakes in additional companies — SpaceX, Flexport, or the post-merger GME/IEP conglomerate itself — Nvidia's precedent proves that private capital follows sovereign capital. The SWF doesn't need to fund everything. It needs one Jensen Huang to validate each bet with a $5 billion co-investment, and the market does the rest.

This theory is speculative. No confirmed evidence links Cohen's acquisition plans to the sovereign wealth fund, and no government official has suggested short squeeze tax revenue as a funding mechanism. But the confirmed facts — Cohen's Trump alignment, the GMERICA trademark, the SWF's funding gap, the Intel equity precedent, the White House's "Power to the Players" meme exchange, Nvidia's $500B Texas manufacturing commitment, and the convergence of timelines — create a framework where the pieces fit. Whether they were designed to fit is the open question.

The Summer of 2026: When Everything Converges

Now that every thread has been laid out — the corporate architecture, the tax mechanics, the political alignment, the sovereign capital web, the infrastructure investments — pull back and look at the timeline. Not one thread. All of them together.

This is not a single event. It's a sequence. And if you're engineering the launch of an American sovereign wealth fund, you would want exactly this kind of sequence: a housing anchor (Fannie/Freddie IPO shares placed into the fund), a technology flagship (SpaceX IPO shares as the crown jewel), a consumer conglomerate (GameStop-Butterfly-IEP combined entity), a tax revenue windfall (short squeeze capital gains), and a logistics backbone (Flexport connecting it all) — all materializing in the months leading up to the most symbolically charged date on the American calendar.

Trump declared that a "smaller Government, with more efficiency and less bureaucracy, will be the perfect gift to America on the 250th Anniversary of The Declaration of Independence." But what if the gift isn't just a smaller government? What if it's a sovereign wealth fund — announced on July 4, 2026, capitalized by Fannie/Freddie equity, SpaceX IPO allocation, and short squeeze tax revenue — presented as America's birthday present to itself? The nation that declared independence from empire, 250 years later, declaring financial independence from Wall Street predation?

It would be, quite literally, something that's never been done before.

Conclusion: The Butterfly Emerges

"Something that's never been done before in the capital markets."

Cohen's reported phrase takes on its full meaning when you see the complete picture:

• A reverse merger with a bankrupt corporate shell — through Teddy Holdings — capturing billions in NOL tax shields via Section 382(l)(5) shareholder continuity, which requires resurrecting "cancelled" BBBY equity ✓
• The largest short squeeze in market history — forcing every open BBBY short, naked short, and total return swap marked to zero to deliver real GameStop shares, while 59 million warrants double the obligation surface ✓
• Acquisition of Carl Icahn's $20B+ empire at an 82% discount, funded by post-squeeze equity, with his son's distressed-debt team as the operating backbone — and WestPoint Home completing the vertical integration with Teddy's consumer brand ✓
• A serial acquisition platform — the "Hollow Men" manifesto as a target identification framework, NOLs making every deal 25% more profitable, Brett Icahn's team executing, $9 billion in meme-stock cash deployed ✓
• Logistics infrastructure already operational — Flexport in BBBY's 800,000 sq ft DFW warehouse[92], 15 minutes from GameStop HQ, backed by Dell's family office, with end-to-end supply chain from factory to doorstep ✓
• Political alignment at every level — Pulte (BBBY community figure, GME shareholder) running Fannie/Freddie, the White House tweeting GameStop's slogan, Intel equity stake explicitly described as "a down payment on a sovereign wealth fund" ✓
• A global sovereign capital web — $3-4 trillion in foreign sovereign investment flowing into the same AI corridor (Stargate, Nvidia, Intel), creating mutual financial dependency that structurally disincentivizes conflict ✓
• Blockchain settlement infrastructure launching H2 2026 — DTCC pilot, NYSE and Nasdaq platforms, the CLARITY Act — eliminating phantom share creation so the predatory shorting that made this saga necessary can never happen again ✓
• A 120-day convergence window in Summer 2026 — SpaceX IPO, Fannie/Freddie privatization, Butterfly merger, Trump Accounts launch — culminating on America's 250th birthday ✓
• A character argument that converges with the financial one — zero salary, a company named after a beloved late father, a legacy succession at 89 — where the tax code, the financial incentives, the strategic logic, and the personal stakes all point to the same decision ✓

Every legal gate is clear. The 382 freeze has expired. Butterfly can merge today. GameStop has the cash, the shares, and the publicly stated intent. Cohen has bet $35 billion on making it happen. Burry has bet his reputation. The institutional infrastructure is in position. The political infrastructure signals alignment at the highest levels. And the financial plumbing — Intel equity, Fannie/Freddie warrants, blockchain settlement — provides the architecture for what comes after.

This thesis is speculative and based on interpretation of publicly available information. It is not financial advice. Always conduct your own research and consult qualified professionals before making investment decisions.

Sources & References

All claims in this thesis are sourced from publicly available documents, court filings, SEC records, and news reporting.