dowfin1

This working paper supports your view that productivity gains will come. The final paper is behind a pay wall however. http://www.nber.org/chapters/c14007.pdf

Financial losses suffered by investors from losing all the cases would be dwarfed by the immeasurable loss to the rule of law in the US.

Hank Greenberg discusses reserves and is pretty smart. http://www.bloomberg.com/news/videos/2016-01-26/hank-greenberg-aig-shouldn-t-be-broken-up

My guess is that this team was hired to kill the SHLD thesis, and cannot do it but is still trying.

If you think that's bad have you seen the building he's putting together in Miami? http://www.miamiherald.com/news/local/community/miami-dade/midtown/article2684594.html The Miami news is saying the tower is flashy even for Miami, that says something right there. It will include a private art museum to house his collection. What does value investing have to do with how you spend it? Does everyone have to live like Warren Buffett to be a value investor? People on this board have more expensive homes than Buffett. Here is Charlie Mungers Catamaran http://channelcatcharters.com/ Does that mean hes not a value investor ? It simply means that he has been and will continue to be busy (maybe preoccupied if he has permit problems) with non-investment matters. Maybe he has broad capacity, but I prefer guys like Buffett and Burry who are almost focused to a fault.

The deal is described as a cash infusion to SHLD from new mortgage debt and new shareholder cash. The question is whether Lambert uses the cash to retire/service old debt or burn it in losses: "In particular, the Company is actively exploring the monetization of a portion of its owned real estate portfolio (potentially in the range of 200-300 stores), through a sale-leaseback transaction, with the selected stores to be sold to a newly-formed real estate investment trust (“REIT”). The Company would continue to operate in the store locations sold to the REIT under one or more master leases. In the event such sale-leaseback transaction were to occur, the Company would realize substantial proceeds from such sale, which would further enhance its liquidity. Additionally, if the Company determines to pursue such a sale-leaseback transaction, the Company expects to distribute to its shareholders, on a pro rata basis, rights to purchase shares of common stock or other equity interests of the REIT, funding a portion of the purchase price for the stores from the subscription proceeds of such shares or interests, with the balance from mortgage or other debt financing."

Piccasso, do you know of any significant assets that would not be available to SCRA bondholders (regardless of creditor priority) whose bonds are guaranteed by Sears Roebuck? I cannot envision a bkcy where the common gets any value before the SRAC creditors. Thanks. So far the common is pulling out value through spinoffs (Lands End) and rights offerings which is hurting those SRAC bond holders. It is hard to know what the capital structure will look like in a few years if Sears goes through bankruptcy. All else being equal to what is in place today, I wouldn't see a situation where the common stockholders end up with assets while the SRAC bondholders get screwed. But it seems very likely to me that there will be changes made to weaken the position of the SRAC bonds before something like that could happen. Before SRAC bonds could touch the holdco assets you have the 2018 2nd lien note, the pension liability and the 2019 notes. Who knows what might add to that list in a few years. I was speaking with a restructuring lawyer about the 2019 notes yesterday and he made a good point. ESL owns over 50% of the notes from the rights offering but has a much bigger financial interest in the equity position due to the size. In a way ESL can be lax on a breach of covenants or priority of payments because he controls the chunk of the capital structure that sits in front of his equity. Not saying he would but something to keep in mind. I still like the value of those notes if they start offering back in the low 80's. From the perspective of a SRAC bond holder, its good that Lampert could make moves as in his capacity as SH creditor to protect his common, which is why I am intrigued by the idea of trading the SH notes for SRAC bonds having a shorter maturity.

Piccasso, do you know of any significant assets that would not be available to SCRA bondholders (regardless of creditor priority) whose bonds are guaranteed by Sears Roebuck? I cannot envision a bkcy where the common gets any value before the SRAC creditors. Thanks.

Thanks Kraven. Bonds (SRAC vs. 8% notes) are not trading anywhere near (relatively speaking) the rating difference, it's inverted. Always an interesting situation. Ben This is why I was surprised that people were predicting (correctly so it turned out, at least in the short term for reason I don't understand) that the 2019 8% notes were going to trade at a much lower YTM than the 2017 SRAC debt. The difference today (11% vs 18% YTM) makes no sense given the lower rating and longer maturity. Might be because the 8% SH bonds par value can be used as purchase currency for warrant exercise, and thus more retail interest.

Regarding warrant adjustment for any rights offering, I suspect the adjustment will depend on the FMV of the rights determined by a 10 day trading average. So if, like the notes/warrants RO, the market undervalues the REIT offering, the warrants will fail to adjust enough for the lost value.

thanx for the well reasoned responses.

I am confused re deferred taxes in the sum of parts valuation and corresponding discount. On SIRI and CHTR stakes, Liberty Media has taxable gains (if liquidated) of over $9B. While deferred taxes can be viewed as interest free loans and have economic value if assets are not sold, should there not be a discount from the sum of parts valuation for these taxes as the market has already done?

Try this planner which allows for variable returns, inflation, expenses, income etc. Its' versatile and lets you stress test your results. http://www.flexibleretirementplanner.com/wp/planner-launch-page/

Alvarez likely approved the deal and asked to participate. From the WSJ article: Mr. Brathwaite [the Sears spokesman] said the loan was approved by the company's board and complied with its code of conduct governing monetary arrangements between directors and the company.

I had trouble getting the same figures as Greenwood, but I came close so here is what I think it is. Invested capital consists of PPE and current assets, less cash and current financial assets. In other words the actual operating assets needed to produce cars (except the cash). DAIC subtracts the net debt (debt less cash and current financial assets). ROOIC is the 19.7 ROIC times 1/.31. I think this the represents owners' economic cash flow return. Hope this helps.