mevsemt

40ish % cash, and thinking of trimming my holdings even further. http://mevsemt.blogspot.com/2013/01/2012-returns.html

Book on John Malone: "Cable Cowboy: John Malone and the Rise of the Modern Cable Business"

When are you gonna update your site, man? It's one of my favorite blogs! :) Sorry man, I've been spending a lot of time on non-blog stuff, so I haven't been posting as much as I'd like. However, with the market hitting new highs, I'm not finding many new ideas (hence the 45% cash). Since I'm basically sitting on my hands right now, I don't have much to write about!

Up roughly 60%. I was up 57% at the end of Q2, and things have gone up since then. See blog for holdings and portfolio size/composition (http://mevsemt.blogspot.com/) -MEvsEMT

Thanks for the kind words. And in case you're interested, I have a blog at www.mevsemt.blogspot.com.

I'm surprised SHLD isn't getting more "face time" on this board... For anyone keeping track, over the last 3-4 months Eddie has: 1. Met LP redemptions with AZO & AN stock, effectively making ESL even more concentrated in SHLD. 2. Purchased approx. 5% of SHLD shares outstanding for his personal account. 3. Sold real estate. 4. Announced a rights offering for Hometown/Hardware. Earlier in 2011 he started selling Craftsmen at Costco and spun off Orchard Supply. Now there are rumors he may be in the process of selling Lands End. In short, we've had more activity in the last 8 months than we've had in the last 5 years. Given what's going on with ESL redemptions, Eddie's personal account, and SHLD itself, I think it's at least possible we could be witnessing the beginning of Eddie's "Berkshire moment", right now and in real time. Thoughts?

Here's a link to my 2011 returns (http://mevsemt.blogspot.com/2012/01/2011-returns.html). Toward the end of the post I show my holdings as of 12/31/2011 (and since then the only thing I've done is trim back on SHLD a little). From the closing paragraph: And I'm not sure whether to call it stubbornness or arrogance, but I've effectively doubled down on Sears and re-initiated a significant position in BAC. My hope is 2012 will prove to be a better year for these struggling companies, and with Sears's assets and BAC's core business, they both have a ton of potential. Needless to say, it's been an exciting few months...

Biaggio, no special insight here, just a little bit of luck and a little bit of stubbornness. Frankly, I credit much of my success with SHLD to Valuegeek, who basically laid out the road map right here on this forum (for instance, in threads such as this one: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/shld). All I did was follow it. Anyway, I post about every transaction I make in real time, so if you want to know what I'm doing with SHLD (or any other holding for that matter), simply follow my blog (http://mevsemt.blogspot.com). BTW, as you can see from my last post, I trimmed back a little earlier this month. -me vs emt

That's easy. The day after Eddie starts selling.

Funny you should mention SHLD... http://mevsemt.blogspot.com/2011/12/kmart-smart.html (12/19/2011) http://mevsemt.blogspot.com/2011/12/more-sears.html (12/28/2011)

I echo Parsad... http://mevsemt.blogspot.com/2011/11/bac-my-favorite-mistake.html (11/25/2011) http://mevsemt.blogspot.com/2011/12/trying-something-different-again.html (12/26/2011) http://mevsemt.blogspot.com/2011/12/adding-to-bac.html (12/29/2011)

Sears Canada Inc. announced today that it will return to commercial real estate developer and landlord, The Cadillac Fairview Corporation Limited (Cadillac Fairview) three stores within shopping centres the developer owns and manages, for a total consideration of $170 million. http://finance.yahoo.com/news/sears-canada-announces-return-three-130000853.html It'll be interesting to see what else Eddie has planned in terms of asset sales or other transactions...

Biaggio, to answer your question - Yes, my Sears purchases in December were basically based on my original thesis (and the fact that the stock had fallen to prices I considered too good to pass up!). Obviously my thesis has evolved and been refined over time, but the truth is it really hasn't changed materially. Here's a link to my first Sears purchase (from November 2010), which is a decent introduction to how I approached the investment: http://mevsemt.blogspot.com/2010/11/transaction-alert-sears-holdings-2013.html. And here's my most recent SHLD post for anyone interested: http://mevsemt.blogspot.com/2012/02/cause-loser-now-will-be-later-to-win.html Alertmeipp, thanks for the kind words!

I added to SHLD twice in December, (stock and LEAPS). http://mevsemt.blogspot.com/2011/12/kmart-smart.html and http://mevsemt.blogspot.com/2011/12/more-sears.html

It's about time! http://mevsemt.blogspot.com/2012/02/cause-loser-now-will-be-later-to-win.html

FWIW I'm off to a great start this year (but given my dismal 2011 performance, my 2012 bounce is more of a relief than something to be proud of: http://mevsemt.blogspot.com/2012/01/2011-returns.html) At the end of December I made BAC warrants about +10% of my portfolio: http://mevsemt.blogspot.com/2011/12/trying-something-different-again.html http://mevsemt.blogspot.com/2011/12/adding-to-bac.html In November I bought a big position in JEF. At the end of November I added to my positions in JEF and AIG warrants: http://mevsemt.blogspot.com/2011/11/couldnt-resist.html http://mevsemt.blogspot.com/2011/11/reshuffling-deck.html Also in December I added positions in Sears and Sears options: http://mevsemt.blogspot.com/2011/12/kmart-smart.html http://mevsemt.blogspot.com/2011/12/more-sears.html And I've had a big position in LUK for years, which is also off to a good start. And that's it, I only have positions in those 5 companies.

CIT is apparently working with Sears again, I wondered what prompted the reversal...

That's true, the imminent/any-day-now short squeeze is something people have talked about for something like 4 years. I would point out that the short interest has never been this high with the share count this low. In fact, over the last 12 months the short interest has only been above 12MM once, and the share count has only gone down over that time. I'm sure no one on this board would buy a stock in anticipation of a short squeeze, but it's as good a reason as any to explain a 8% jump on no news.

Or maybe it's more simple. Between Berkowitz, Lampert, and Tisch you have something like 86MM shares controlled. You probably have another 1-3MM shares owned by index funds. So let's say that's 88MM shares that don't really trade freely. You have a 14MM share short interest. You have 106MM shares outstanding. So, you have something like 75-80% of the "free" float being sold short. So maybe this is just a little short squeeze driven by randomness...

Eddie personally owns 20% of the company now, give or take... who knows, maybe he's buying more as I type. Between the AZO and AN redemptions from ESL, and now personally buying SHLD in a private purchase from Investors, the size of his hedge fund has definitely shrunk. Meanwhile, his personal stake in SHLD is growing... I wonder if this is his "Berkshire" moment?

I don't know how to feel about this... on one hand you've got CIT halting loans to suppliers, and on the other you have Eddie buying shares (for his personal account nonetheless)... http://blogs.wsj.com/deals/2012/01/12/edward-lampert-buys-150-million-more-sears-stock/?mod=yahoo_hs

Keep in mind that Eddie is using AZO stock for redemptions, effectively doubling down on SHLD for the investors that are keeping their money with him. If bankruptcy or liquidity were an imminent concern, my guess is he might be handling the redemptions differently.

I think you don't have to look much further than the #1 and #2 spots at Sears. Lou and Robert (http://en.wikipedia.org/wiki/Robert_Schriesheim) are NOT the guys you'd bring in to turn around the retail operations of a 4000 store, $40B revenue company. It's true both these guys have IT experience, but I'm not sure how relevant that is either. Rather, both these guys, especially Robert, are transactional/restructuring guys. And call me crazy, but just about all the significant developments in 2011 are the what I'd expect to see in a Sears transformation: Orchard spin off, Craftsmen at Costco, store closures. So, IF (big if) a transformation is about to get underway, the question is this: is there enough value under the Sears umbrella to earn a satisfactory return for shareholders? At just over $30 a share, it might be a risk worth taking...

SHLD straw man (please feel free to critique): Real Estate and KCD (Kenmore, Craftsmen, Diehard) are primary sources of value. Other sources of value include Sears Canada, Hometown, Auto Centers, Home Servicing, and Lands End. Primary concern is Sears-the-retailer has largely lost relevance with shoppers (clearly reflected in same store sales). Debt load and pension obligation are worrisome. How can the value of Sears be salvaged to earn best possible returns for shareholders? A retail turnaround may have been the goal at one point, but the return on investment would likely be very low (and that's assuming a turnaround could succeed, a failed turnaround would likely have resulted in bankruptcy). I think Eddie quickly realized that a slow liquidation with brand and real estate moneitization would provide the best risk/reward scenario. Why slow? For one, KCD needs to establish "critical mass" in other distribution channels (online, Ace, Hometown, Costco, with more to come?) to preserve brand value. Once critical mass is achieved, real estate sales and subleasing can move forward at a faster pace. Question: Can the souce of cash generation (for both Kmart post bankruptcy and Sears Holdings post merger) be considered a function of unprofitable store closures and inventory liquidation/reduction? For instance, Kmart closed ~600 stores as part of the bankruptcy process, and although same store sales continued to be awful, cash generation was substantial. In 2004, a small % of Kmart's real estate was monetized (Home Depot - sold 4 properties and assigned 14 leased properties for $271MM. Sears - sold 4 properties and assigned 45 leased properties for $576MM), adding to Kmart's cash. Is Eddie about to do something similar? So, here are the questions I've been thinking about: How quickly can KCD achieve critical mass through other distribution channels, and how profitable will that be? How much real estate can be monetized, how fast can this happen, and what kind of cash can it generate? How quickly can Sears shrink their store footprint, and what kind of cash will inventory reduction and the closure of unprofitable stores generate? Lastly, what does Sears look like in 5 years? Is it too big to do what Vornado did (http://www.fundinguniverse.com/company-histories/Vornado-Realty-Trust-Company-History.html)? Can it truly be a holding company with 4+ operations (that are much less integrated than they are today): brands, real estate, Hometown/auto/home servicing, retail (much smaller than today), and maybe acquired companies?

Here's the link from the company: http://searsholdings.com/pubrel/pressOne.jsp?id=s16310_item98114