SHLD anyone?

[colinwalt]

Call transcript:

http://seekingalpha.com/article/387351-sears-holdings-s-ceo-discusses-q4-2011-results-earnings-call-transcript

 

Lampert's letter:

http://searsholdings.com/invest/index.htm#letter

[alertmeipp]

How does all these financial transactions change its crappy stores?

[biaggio]

How does all these financial transactions change its crappy stores?

 

you re right it does not change their crappy stores at all.

 

As has been said here before the thinking is that they will close/get rid of all their crappy stores, spin off what they can, hold on for economic recovery + try to get as much $$ as they can from their assets they don t want + be left with the assets (the brands, rental property, insurance company) they want.

 

I found it amazing and surprised that they sold a lease on a single store for $250 million. I am sure they do not have many of these left.

 

Have enjoyed the volatility in stock price. Interesting crowd psychology.

[txlaw]

This move in Sears has been astonishing.  I cannot believe that it was at  less than $30 a little more than two months ago and is now at $84. 

 

Wild.

[turar]

At which point does this become a short candidate?

[txlaw]

At which point does this become a short candidate?

 

I never know when something is a good short candidate.

 

I don't short, and if I did, I would only short a company that was highly leveraged and in danger of going into BK, or one that was clearly a fraud.

[mevsemt]

At which point does this become a short candidate?

 

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

[compoundinglife]

At which point does this become a short candidate?

 

I am curious why so many people are interested in shorting Sears (not on this board, but in general)? I have never taken a short position but I would think if I were in that game I would really want to avoid illiquid issues with, borrowing fees, high insider ownership, especially when the owners are super investors? It just seems like a really bad idea for a short, regardless of the prospects as an ongoing concern. I am really curious what the attraction is. Disclosure, long.

[Guest Hester]

I am curious why so many people are interested in shorting Sears (not on this board, but in general)? I have never taken a short position but I would think if I were in that game I would really want to avoid illiquid issues with, borrowing fees, high insider ownership, especially when the owners are super investors? It just seems like a really bad idea for a short, regardless of the prospects as an ongoing concern. I am really curious what the attraction is. Disclosure, long.

 

As primarily a short seller, I've never understood why the shorts fall over each other on this one either. I get the thesis, but when something costs you 30 or 40 or 50 percent each year to short, that's a pretty high hurdle to climb. Especially if the thesis isn't fraud.

[racemize]

As primarily a short seller

 

Primarily a short seller on a value board?  I've written off shorting myself, as it seems too short-term dangerous.  Edit: not trying to insinuiate anything, just found it curious.

[Rabbitisrich]

 

 

As primarily a short seller, I've never understood why the shorts fall over each other on this one either. I get the thesis, but when something costs you 30 or 40 or 50 percent each year to short, that's a pretty high hurdle to climb. Especially if the thesis isn't fraud.

 

Who knows why retail investors short SHLD, but it makes managers look like more of a genius if they "prove" big fish to be wrong.

[Guest Hester]

As primarily a short seller

 

Primarily a short seller on a value board?  I've written off shorting myself, as it seems too short-term dangerous.  Edit: not trying to insinuiate anything, just found it curious.

 

Short selling is just another form of value investing. Besides there are no short selling boards like this one. Plus, I do plenty of work on the long side, especially recently, and despite usually spending more time on the short side I'm always net long.

[biaggio]

More store closings announced- http://www.marketwatch.com/story/sears-plans-to-close-62-additional-stores-2012-03-15

 

interesting- "Edward S. Lampert's hedge fund has stepped in to make sure vendors continue to supply Sears Holdings Corp. stores by assuming some of the risk of financial institutions that provide a form of insurance to the vendors."

http://online.wsj.com/article/SB10001424052702304692804577282090364006420.html

 

mevsemt- You seem to have some special insight when it comes to SHLD- are you going to let us know when you're thinking of getting off this roller coaster ride (have enjoyed the last 90 days - I don t want to take a round trip to $30).

[mevsemt]

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

[BargainValueHunter]

Eddie Lampert is shopping Land's End...

 

http://www.nypost.com/p/news/business/lands_end_game_5p3ePLWUD0sqSpTPERJGeM

 

Eddie Lampert is cleaning out the closet at Sears, and he’s not feeling sentimental about Lands’ End.

 

The number-crunching hedge-fund tycoon — who, as chairman of Sears Holdings, has lately been scrambling to raise cash amid heavy losses at the Sears and Kmart retail chains — has quietly been shopping the Dodgeville Wis. mail-order catalog to potential buyers, The Post has learned.

 

Lampert, who inherited Lands’ End when he took control of Sears in 2005 by merging it with Kmart, has approached a handful of private-equity firms as he looks to raise as much as $2 billion in cash, sources said.

 

 

[mevsemt]

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?

 

 

[zarley]

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?

 

It's funny.  I've managed to both buy the bottom and sell the top (in relatively small amounts) in the last couple months.  While I tend to agree that all the recent activity is a good indication that Lampert is moving into the next phase of SHLD's operations, I get the feeling this was forced on him rather than it being his preferred outcome.  All of the recent moves combined with a potential sale of Land's End will have shed some good assets from the core business.  What he does with the cash he receives will be interesting to see.  It may be a Berkshire moment (positive) or it may just be them bailing water from a sinking ship, trying to stay afloat as long as possible (negative, but less likely I think).

 

I still own a small amount, and if prices get back down to $30-$40 I may buy more, but for now I'm mostly watching.

[BTShine]

First post here.  My apologies if the formatting doesn't work out well.

 

Mevsemt -  Agreed, this is big stuff im my opinion.  If the sale of Lands' End works out, we will witness the announcement for sale/liquidation of $3 Billion of assets in less than 3 months.  That doesn't include the approx. $500 million inventory reduction.  2012 could see a cash influx of $3.5 Billion if Lands' End is sold this year.

 

It boggles my mind as to why the market thinks this is a capital destructive move.  But, that's why guys like you use "Me Vs EMT" for a name, and why guys like me think the MeVsEMT name is fantastic. 

 

 

 

 

[biaggio]

if they get $2B for Lands End, along with their recent RE sales -they will have recieved more money than I anticipated.

 

Any thoughts on the value for Craftsman, Diehard, other brands in general?

 

I am hoping for a better balance sheet + getting rid of the red ink on the income statement.

[BTShine]

For a comparable, the Stanley Black and Decker Tools division has profit margins of 13%.

 

From the recent 10-K:

Segment profit increased $223 million from 2010, inclusive of $20 million in merger and acquisition-related charges. Excluding those charges, 2011 segment profit was $702 million, or 13.4% of net sales, which compares to 2010 segment profit excluding merger and acquisition-related charges of $585 million, or a consistent segment profit rate of 13.4%. Aside from the impact of merger and acquisition-related charges declining by $107 million, segment profit increased in 2011 due to the favorable impact of cost synergies, higher sales volume and continued growth in Latin America. CDIY segment profits in 2011 also reflect the unfavorable impact of unrecovered commodity cost inflation, the impact of promotional spending associated with older generation products (which offset other product list price increases), and the continued impact of the previously discussed Pfister business loss.

 

Also, it shows that Stanley's CDIY, or Tools Division, had sales and profits of $1.258 Billion and $141 million respectively in 2009 (pre-merger; does not include Black and Decker).  Profit margins were around 11% for Stanley Tools. 

 

You can make your own assumption for Craftsman's revenues, margins, etc.  I'd think Craftsman would be worth between $1 and $4 Billion. 

 

Google Trends shows that people search for "Craftsman Tools" around 2X more than "Stanley Tools".  That could imply that Craftsman Tools has twice the selling potential?  That's a huge question.

http://www.google.com/trends/?q=craftsman+tools,+stanley+tools&ctab=0&geo=all&data-ipsquote-timestamp=ytd&sort=0

 

 

[rogermunibond]

Craftsman tools are made by Danaher and others. Is that a similar situation for SBD?  Don't they do their own tool manufacturing.

[mevsemt]

 

Mevsemt -  Agreed, this is big stuff im my opinion.  If the sale of Lands' End works out, we will witness the announcement for sale/liquidation of $3 Billion of assets in less than 3 months.  That doesn't include the approx. $500 million inventory reduction.  2012 could see a cash influx of $3.5 Billion if Lands' End is sold this year.

 

It boggles my mind as to why the market thinks this is a capital destructive move.  But, that's why guys like you use "Me Vs EMT" for a name, and why guys like me think the MeVsEMT name is fantastic.

 

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

[BargainValueHunter]

Eddie Lampert will be on CNBC Wednesday.

 

Rare opportunity to listen to his SHLD thesis.

 

http://www.streetinsider.com/Trader+Talk/Sears+Holdings+%28SHLD%29+Up+As+Eddie+Lampert+To+Co-Host+CNBC+Show/7318497.html

[Vish_ram]

It is very interesting that you call this as "Berkshire moment". it is in fact the very anti-thesis of Berkshire. Buffett took money out of losing Berkshire and invested in profitable entities. Lampert has doubled down on SHLD selling other stuff & Sears revenues keep falling. Perhaps you should call this as Pre-Buffett Berkshire moment.

 

I still cant figure out how long term shareholders (not those trading in and out) in the end will make money when revenues continue to drop. Lampert can star in the movie version of "Honey I shrunk the equity"

 

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?

[biaggio]

Anyone watch Mr Lampert on CNBC.

 

Enjoyed listening to Bonderman. Interesting comments re Rainwater's investment philosophy, as well as some funny stories

 

As far as SHLD-did not sound like Lampert planned on using SHLD ala BRK. He talked about SHLD reinventing itself. Sounds like they are intent on changing things, trying different things + see what works. He talked about working on the relationship between individual + retailer.

 

Does not look like the market liked it- SHLD down 7 %.

 

What do others think?