biaggio

15% of his income fund invested in SHLD bonds I assume. States that shld will become next BRK

Thanks for posting Jacob. Painful. Seems self reenforcing decline especially seeing that he is so concentrated (redemptions lead to selling of holdings, which lead to lower prices which lead to more redemptions). Wonder if he has looked at different business model, like FFH or BRK.

Longinvestor-any idea what that part (the sticky) of the business is worth? Don t know much re RIMM, have been following story here + in news (own it indirectly like others here thru FFH) Wonder about any hidden values? Specifically their network business: Article in NYtimes http://dealbook.nytimes.com/2012/01/23/new-rim-chief-not-looking-to-split-company/ " the company’s incoming chief executive says he is not entertaining the idea of splitting the company into two separate businesses. Thorsten Heins, who was named chief executive of RIM on Monday, said on a conference call that he thought RIM had a “very strong technology heritage,” and that he did not plan to separate RIM’s device business, which includes the BlackBerry and the PlayBook tablet, from its network business."

Will be interesting to see how it works out for them. Agree with comments from PLanMaestro above. I think its risky when you re selling commodities like JC penny. Works well for non commodities-Its rare to see discount pricing at Apple store, and I have never seen a mercedes or Porsche dealership with 40% off sale---I have purchased many apple products + have never experienced buyers remorse .

http://www.gurufocus.com/news/158812/howard-marks--what-can-we-do-for-you- I don t think this was posted here before, forgive me if it was.

http://www.gurufocus.com/news/155261/twosided-markets-and-mastercards-moat-ma Interesting article on concept of 2 sided market (economic platform).

Kraven- I am not sure at all how it works-find it interesting. Reading my post again it(my post) does not make sense that someone would loan money (bonds) to an entity without good collateral. I am guessing in this case that these loans(bonds) are backed by these securities e.g. mortgage backed securities) Wabuffo- thanks for the post...I do remember reading that in 10k

Biaggio, is there any disclosure on this? Have searched 10k, 10q in past-but have never had anything close to what is described in the following article in a old business week. http://www.businessweek.com/magazine/content/07_16/b4030071.htm "BusinessWeek has learned that Sears has created $1.8 billion worth of securities based on the brand names Kenmore, Craftsman, and DieHard. In essence, it has transferred ownership of the brands to another entity, which it then pays for the right to use the brands. The deal, carried off last May, was the biggest "securitization" of intellectual property in history, according to Eric Hedman, an analyst at Standard & Poor's (MHP ), which, like BusinessWeek, is a unit of The McGraw-Hill Companies. (MHP ) The story hasn't gotten out until now because the bonds haven't actually changed hands—Sears is holding them in its Bermuda-based insurance subsidiary—and because Sears has never disclosed them, nor has it had to do so. But that could change if Sears were to decide to sell them to outside investors and collect the cash."

the downside is the bonds you buy may be of a subsidiary of the holding company that could go bk without the holding co going bankrupt. I read an analysis that suggests that the common stock SHLD could be unharmed if they decide to put certain subs into bk. in fact a BK of a sub could be good for the holding co. this is not simple and I would not do anything unless you 100% understood where the bonds lie in the cap structure. I am not sure exactly how it works but apparently Mr Lampert has put the valuable assets (brands, realestate) into a "bankruptcy remote" subsidary (I think it is within a subdivision which provides insurance to the corporation)---so if the bonds default there may not be any hard assets to cover the default. It would be instructive to see Mr Lampert buying some of these bonds. To my knowledge I dont think he has. I am not sure how to check for this kind of purchase.

"While we're at it, LSD should probably be legal too. The case isn't as strong as marijuana, but the long term negative effects are weak, or comparable to some legal drugs like alchohol." Hester, I always enjoy your post. I think you re going over the line on this one.

mevsemt did you read the filing attached to article? Was that an actual market purchase or was it just a transfer of shares + payment in lieuof management fees...Form 4 a bit complicated for my simple mind. I am very interested to see if he buys more with price falling. More pain to come I am afraid.

It appears that shares of SHLD transfered to shareholders of ESL, RBS. i.e. Mr Lampert now owns those shares directly? Is that right? Thanks for update oldye + Txlaw

How about moving to Malta...looks beautiful. Close to Europe. Housing probably cheap. Personal Tax = 15%. Low Corp Tax (claimed in article below). If you re going to manage your $$$ you can do it from their + travel the world, enjoy life,etc (The rest of us have to stay here in North America and earn a living) "Hey Hedge Funders, Here Are 10 Reasons You Should Move Your Firm To Gorgeous Malta" Read more: http://www.businessinsider.com/10-reasons-to-move-your-hedge-fund-to-malta-2012-1#ixzz1jC9MeE7a

Hey Hedge Funders, Here Are 10 Reasons You Should Move Your Firm To Gorgeous Malta Read more: http://www.businessinsider.com/10-reasons-to-move-your-hedge-fund-to-malta-2012-1#ixzz1jC9MeE7a

sorry, you re right

is this not a contrarian indicator ie low confidence that there will be a crash indicates that there is a lot of confidence in the market , which feels about right for the rally since the New Year.

interesting. Thanks. I am part way thru the book "Quality of Earnings" and one of the first chapters is on looking for discrepencies between company reports (annual report + 10K as an example).

Thanks Nod that works

I can see them transforming themselves to a smaller brick + mortar foot print (much less stores---sell, sublease, etc to other successful retailers) but have a much larger online/internet based business (ala Amazon)...and actually sell things that people really want (with a decent margin). The physical stores they actually have left will be used to distribute products that are ordered online or to show case products that have to be seen in person like furniture (We were pleasantly surprised with our recent visit to one of their home/furniture stores). All this is dependent on them surviving the immediate future. I don t see retail as being a good or great business i.e too competitive. If SHLD can survive it will be interesting to see the value that ESL can derive from their assets.

that would warm my heart but I may question his IQ. Should be interesting?

Sears taps retail veteran to oversee merchandising Question is whether he’ll be given the authority to steer ship http://www.marketwatch.com/story/sears-taps-retail-veteran-to-oversee-merchandising-2012-01-03

Have enjoyed discussion here. I own a small Walter Schloss amount of SHLD (now a much smaller mini schloss position) I invested for the same reason as Txlaw: "SHLD has always been an asset play to me (real estate and brands) plus the optionality of Lampert deploying released capital into other businesses, not the optionality of him turning Sears and Kmart around." Has the thesis been effected by recent developments? Would we feel differently if stock was still at $66 (with the recent announcements). I am re evaluating my holding- hold on? sell? or average in? What bothers me is: i the timing of the announcement--- x mas time (I am sure it bothers the poor employees even more)---this should be the most profitable quarter. ii the need to tap lines of credit. iii the background of CEO (not a retail, real estate, or consumer brand guy) iv value of assets probably losing value as we speak. Poor operations-No moat, etc. Potential subleasers or buyers of real estate may be waiting for SHLD's liquidation (on the other hand maybe he is in deep negotiations with potential suitors + closing of stores are part of the deal-probably wishful thinking). SHLD's ongoing operations has to be (at least a small) pain in the a$$ for its competitors---SHLDs has a lot of sales that can be eventually absorbed by WMT, Loews, Target etc--- I am sure these competitors will be happy to see SHLDs demise. It appears SHLD trying to hold out til either the economy picks up + raises all boats or a deal is made with their competitors. What is interesting is what he has done inside the Bermuda insurance subsidury. Will the share holders end up with ownership of Bermuda insurance co. owning real estate, brands, etc? This would be up ESL's alley as an expert in financial engineering. Peter_Burke_CEO may be right-It does seem that bonds at <50 cents on the dollar may be best buy (though bond holders apparently not able to claim assets within Bermuda insurance company---I am not sure how that works-but have read that here + elsewhere.) Peter_Burke_CEO -how do I buy these? It will be interesting + instructive to see what ESL does next.

How about playing Monopoly? My kids would play for hours with me, even as young as 5 or 6 years old-there is a lot of learning from simple counting to addition, subtraction, mortgaging...counsequences of decisions (they soon learn to allocate their capital as soon as possible i.e buy everything). Now that they are teenagers of course they would rather do other things (without their Dad). I think they learn from seeing what their parents do- what their values are etc. I think be careful putting too much emphasis on getting paid for chores- I think it is important that they realize that sometimes (or a lot of times) you have to do something without getting directly paid because you re part of the family + everyone has to chip in + help out.

Its like we have a bunch of teenagers running these things. I have a question- is cash in bank account or brokerage accounts at risk here? It seems by definition it is the money they hold as collateral that they can hypothecation + re-hypothecate. Is this a form of investing float? Makes you want to run out + buy hard assets that you can store under your mattress.

Decrease housing inventory which is inhibiting a large part of the economy PLUS Makes sense to me (Probably obvious to everyone here) that increasing affluent , talented ,able population would lead to jobs, economic benefit, especially if they can innovate and/or create new business + not so much if they come over and put me out of a job which is the fear. With time the benefit will trickle down to the rest of population (e.g. they need to buy food, clothing, cars, services of various types from the rest of us). They can always innovate in a different country without the jobs and other economic benefit.