Parsad

Thanks everyone! Much appreciated. To my American compatriots...Happy Independence Day...enjoy your BBQ's, fireworks and time with family & friends! Cheers!

Or, what if they could cut the operating losses and get back to generating cash? This is a company that over only a handful of years, repurchased 35% of it's shares while simultaneously funding the pension and paying down debt. Sears generated an incredible amount of cash between 2005-2010... even as they reported mediocre results. So perhaps we can say the downside is minimal and the upside is either double in a liquidation or possibly much, much, more than double in a transformation. Sounds good to me. It's possible to close enough underperforming stores and get it to break-even or a very modest profit. I just think the department store margins have been squeezed on too many goods by the likes of Walmart, Target & Amazon, let alone direct competitiors like Macy's and Nordstroms. In the meantime, the Sears brand and image has been damaged, so there is a certain segment of the core customer base that will not come back again. Cheers!

Nope...I'll own a hell of a lot more than 1% of the stock! Compensation will be $99,999 annual salary, no options, no stock plan, no bonuses, no director's fees, no car, no jet (fly economy), no Vancouver Club...no Terminal City Club (eat lunch at my desk), and will have an open office (no door). Why $99,999...because I don't think I'm worth as much as Buffett! Cheers!

The supporters will say that he sold BC to BH for $1 and then bought it back for $1.7M...how is that unfair or unethical for BH shareholders? Tomato...tomato! Cheers!

If he spent more of his time and intellect worrying about investments and acquisitions, and less time and intellect about his compensation, I think he would be further ahead long-term at this point...he also would have a rock-solid shareholder base that would have let him run this company forever without ever holding another shareholder vote. Instead, every few months you see another compensation filing, or some other way of entrenching himself. Cheers!

Although there will be regulations around the advertising and increased disclosure. Cheers! http://www.cnbc.com/id/100864030

The world is so much better with the Winklevii in it. They've become like the Kardashians, but with Harvard degrees! Cheers!

Likely was a good deal for both CBL and Sears. I took a look at CBL's 10-K and found some interesting information. On Page 3 of their 10-K, you see a list of the top tenants (ranked by revenue). Sears is #25 (lowest revenue of the top 25), but has the most square feet of space. One fascinating set of statistics: #25 Sears has 9.34 Million Square Feet with CBL and is 0.76% of CBL's revenues. 9.34 m sq ft = $7.6 million. #24 Christopher & Banks has 0.25 million sq ft and is 0.77% of CBL's revenues. 0.25 m sq ft = $7.7 million. #9 Dick's Sporting Goods has 1.27 million sq ft and is 1.44% of CBL's revenues. 1.27 m sq ft = $14.4 million. (CBL's Revenues are approximately $1 Billion) Let's take Sears vs. Dicks. They likely use similar real estate within the mall (larger, anchor type space). Sears uses 7 Times the Real Estate (9.3m vs. 1.27m) while paying 1/2 of the lease payments!!! Per square foot, Dick's pays 14 times what Sears pays! (This is helped by the fact that Sears owns much of their space, paying zero rent for that space) If we dig further (page 29), we see that Sears leases 2.2 million of the 9.3 million square feet (some of that 9.3 million square feet is owned space). This means that Sears pays about $3.50 a square foot for their leased space. For comparison, Dick's pays about $11.50 a square foot. $3.50/square foot is a very low price (an understatement)...currently CBL's average mall lease rate is $29.72!!! Sears pays $3.50 and everyone else pays nearly $30.00!!! $30 sq/ft is only for space less than 10,000 sq ft., it's still a solid data point. What is the CBL related Sears property worth? Well, if it could be leased for even $10/square foot, it would generate $93 million each year. At a cap rate of 6.7%, this space would be worth over $2 Billion. Only 9 million of SHLD's 200+ million square feet. Potentially $1.4 Billion in value. Interesting. WOW! I still stand by what I said, if SHLD can't make that store (and, apparently, all their others) work, then I question their ability to do anything correctly. DKS does more with less, and pays more to get it and is still doing better than Sears. Not bearish on the stock necessarily, but I am amazed at just how bad things always seem to be at SHLD. The model is what is broken. Most people don't shop in department stores where merchandise is broad and specific selection limited. They go to very specific shops to find exactly what they are looking for now...jewelry store, sporting goods store, ladies underwear and clothing, electronics, indoor or outdoor furniture, men's suits, appliances...the list goes on and on. You have less selection, less sales per square footage, more employees, more utility bills, more insurance, less inventory turnover...the model is not efficient, even if their lease rates are low! Then combine that with Sears being the worst operator in such an industry, lower quality brand than say Macy's or Nordstroms, and a turnstile management team with a Chairman who literally sat on his ASSets too long as the brand deteriorated, and you have trouble! Cheers! Parsad, I respect your opinion, and do not disagree with that you said. But, do you have any thoughts relating to the real estate values, asset values of subsidiary companies and brands? Or, any thoughts on the viability of their turnaround efforts? Or, were you saying that because their business model is broken the SHLD investors are doomed? It's pretty well documented that Sears/Kmart's current business is not successful (as stated by their CEO). No, I'be always thought that the assets have value, but they were too slow in monetizing them. Instead, a lot of value was eaten up by continuing losses from the department store business. I think that portion of the business in many markets is doomed. Sears scaled down department stores will still do reasonably well in more rural under-served communities, but there is too much competition elsewhere. The other aspect is how much are those assets worth when monetized, relative to the remaining liabilities of the company, including debt and pension liabilities? I think you could easily double your money if they work quickly, efficiently, and cut operating losses. Cheers!

Likely was a good deal for both CBL and Sears. I took a look at CBL's 10-K and found some interesting information. On Page 3 of their 10-K, you see a list of the top tenants (ranked by revenue). Sears is #25 (lowest revenue of the top 25), but has the most square feet of space. One fascinating set of statistics: #25 Sears has 9.34 Million Square Feet with CBL and is 0.76% of CBL's revenues. 9.34 m sq ft = $7.6 million. #24 Christopher & Banks has 0.25 million sq ft and is 0.77% of CBL's revenues. 0.25 m sq ft = $7.7 million. #9 Dick's Sporting Goods has 1.27 million sq ft and is 1.44% of CBL's revenues. 1.27 m sq ft = $14.4 million. (CBL's Revenues are approximately $1 Billion) Let's take Sears vs. Dicks. They likely use similar real estate within the mall (larger, anchor type space). Sears uses 7 Times the Real Estate (9.3m vs. 1.27m) while paying 1/2 of the lease payments!!! Per square foot, Dick's pays 14 times what Sears pays! (This is helped by the fact that Sears owns much of their space, paying zero rent for that space) If we dig further (page 29), we see that Sears leases 2.2 million of the 9.3 million square feet (some of that 9.3 million square feet is owned space). This means that Sears pays about $3.50 a square foot for their leased space. For comparison, Dick's pays about $11.50 a square foot. $3.50/square foot is a very low price (an understatement)...currently CBL's average mall lease rate is $29.72!!! Sears pays $3.50 and everyone else pays nearly $30.00!!! $30 sq/ft is only for space less than 10,000 sq ft., it's still a solid data point. What is the CBL related Sears property worth? Well, if it could be leased for even $10/square foot, it would generate $93 million each year. At a cap rate of 6.7%, this space would be worth over $2 Billion. Only 9 million of SHLD's 200+ million square feet. Potentially $1.4 Billion in value. Interesting. WOW! I still stand by what I said, if SHLD can't make that store (and, apparently, all their others) work, then I question their ability to do anything correctly. DKS does more with less, and pays more to get it and is still doing better than Sears. Not bearish on the stock necessarily, but I am amazed at just how bad things always seem to be at SHLD. The model is what is broken. Most people don't shop in department stores where merchandise is broad and specific selection limited. They go to very specific shops to find exactly what they are looking for now...jewelry store, sporting goods store, ladies underwear and clothing, electronics, indoor or outdoor furniture, men's suits, appliances...the list goes on and on. You have less selection, less sales per square footage, more employees, more utility bills, more insurance, less inventory turnover...the model is not efficient, even if their lease rates are low! Then combine that with Sears being the worst operator in such an industry, lower quality brand than say Macy's or Nordstroms, and a turnstile management team with a Chairman who literally sat on his ASSets too long as the brand deteriorated, and you have trouble! Cheers!

--“King Icahn” +1 In most areas of life there are no absolutes, everything is varying shades of gray. But there are some areas where it is all or nothing. If I give you a large glass of drinking water and you see me place a 1/4 teaspoon of raw sewerage into the water, would you find it comforting and be willing to drink it if I told you that it was 99% pure drinking water? No, in this case 1% sewerage is as bad as 100% sewerage. You are not going to drink it. The other things I put in this category are freedom (there is no such thing as part time slavery or being mostly free) and integrity (you can either be trusted or you can’t). This is the reason that even though I made a lot of money investing with Biglari in the past I no longer do so. +1! Cheers!

Looks to me that the only change is that the equity portfolio for BH is now a limited partner in Lion Fund(s), which will have a higher hurdle of 6% compared to other limited partners who have a hurdle of 5%. So he will still get an incentive fee, but slightly less than if the equities were invested directly through BH, but NO CAP! Wholly-owned investments within BH, and equity investments through the LP. He now doesn't need shareholder approval to bypass the cap. Cheers!

Apple rehires Yves St. Laurent CEO. Hopefully some cutting edge design ideas for new and existing products sprouts from this. Cheers! http://www.bloomberg.com/news/2013-07-02/apple-hires-yves-st-laurent-ceo-for-special-projects.html

Well it really should have always been a REIT, but they were too slow in that shift. I think they are finally moving the chains alot quicker. If they do it fast enough and well enough, there is great value in monetizing the real estate assets...but they have to execute and fast! Cheers!

What changes were the SEC asking for? Was it that you can't have the company you are trying to control, buy up its own shares with company capital, so that you can increase your voting control? Cheers!

No, I don't think that is it, since the equity investments would still be market to market, and the value would show up in the change in equity. But I do believe that this either has to do with compensation or getting shareholders onside. Cheers!

Article on the tighter rules that will be imposed above Basel III. Cheers! http://www.bloomberg.com/news/2013-07-02/tarullo-says-fed-very-close-to-leverage-ratio-proposal.html

So why wasn't this enacted in the beginning, when all of this controversy first began? Oh wait, this was the original structure, but BC was sold to BH because of perceived conflicts. It's the same thing we would do going forward at MPIC and if we took over a company. He could have probably avoided all of this if he had listened to his colleagues and shareholders. Does BH have any votes they need to pass still? Can't remember if they passed the last shareholder vote, or was the meeting postponed. Cheers!

By the second...what are you a cellphone company? ;D Cheers!

LOL! You should have shopped when we all shopped back in April. Cheers!

Cook maybe changing the culture but he is keeping the values. They've even created ads to tell you so. They can enter lower priced segments and continue to grow their cash flow. The former does not rule out the latter. They have done a huge risky redesign of their product. Cook fired the second most powerful guy in Apple. They are completely revamping their supply chain, made their biggest capital expenditures and started the biggest capital return in history. And they are entering new product categories. Cook hardly seems to be preserving status quo. Risky redesign of which product? iPhone5...iPad Mini? If this is risky, then I would hate to see what safe is. Also, there has been a bit of a backlash to the "Designed in California" ad...why not "Designed in the U.S.?" Why the whole California, we're 60 year old hippies and cool, push. It's been the lowest scoring Apple ad in history! http://bostinno.streetwise.co/2013/06/28/new-designed-by-apple-in-california-commercial-is-lowest-scoring-apple-ad-ever-videos/ The iWatch or iTV better be around the corner, otherwise things are going to get stale pretty quick. Remember when DELL missed the advance of tablets or Microsoft missed the advance of Google Search...Apple better avoid any sort of similar complacency. Cheers!

Still think this will get sold in near term (like 3-6 months)? Depends if they get a decent offer. I think with the team they have in place, and the balance sheet is quite strong, they will develop the properties until they get an adequate offer. No rush to give it away. Cheers!

Alan, did you or your wife buy anything? Hope you spent a lot! Cheers!

Great presentation! This guy knows his business and his numbers. Cheers!

Good article on new CEO, James Bennett: http://www.menafn.com/999aea58-8c9d-4858-a1b8-1cddcf1c742b/SandRidge-Energy-CEO-shares-vision-for-company?src=main Cheers!

You would be correct on all of these comments. You would also have to admit that the value proposition certainly changed once the company's market capitalization went down below the net cash on the books. I don't dispute that businesses like DELL and BBRY are in for very difficult times from their competition...I just disagree about when an investment can be appealing, regardless of the long-term disaster that may await it. Price is everything and Prem got the price wrong on BBRY. Doesn't mean it isn't a good investment at a certain price. Cheers!