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SHLDQ - Sears Holdings Corp

alertmeipp

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Luke 532 Newbie

Luke 532

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Absolutely. Why would we believe that Einhorn was EXACTLY correct about the value of 2/3 of the land they owned, but at the same time also believe that he is wrong by a huge amount on the value of the other 1/3? He has done so much work on JOE over multiple years that the timberland sale would make me more confident in Einhorn's thesis, not less so.

 

The author also has clearly not done a ton of work on JOE either, as they assert that Berkowitz can invest JOE's cash and earn far above what the timberland was earning. In fact, according to the agreement he has with JOE, he is very limited in what he can invest the money in, and most of it has to be in fixed income securities. That could change in the future, but until it does...

 

If someone is correct about 2/3 of a portfolio it doesn't necessarily make him correct about the other 1/3, but I would certainly give him the benefit of the doubt and assume his calculations are more accurate.  I have no position in JOE so I don't care either way.  I like how Berkowitz used tax values to determine a rough estimation of EACH property in SHLD's portfolio.  Take the tax values, discount them by whatever amount you want just for a margin of safety, and you're still sitting pretty.

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plato1976 Newbie

plato1976

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I am wondering why many ppl think Lampert will use SHLD as his future investment flagship . If SHLD continues to shed valuable assets. SHLD itself will be worth less and less. The current owner will get the ownership in many spinoff entities. The total value of these entities plus SHLD may be worth much more than the price of the current SHLD, but how Eddie can continue to use SHLD as the flagship is a question - how can he put the value back into the flagship SHLD ?

 

I have to think that Lampert is nearing his plan to unleash more value out of the real estate and remaining brands in a more quick fashion now. He is spinning off a sizable asset and a profitable portion of an unprofitable overall company. He is lowering his interest coverage ratios, etc. He knows this (he is not a dumb guy), and i think it suggests that he is closer to unlocking more value from remaining real estate and brands. I wouldn't be at all surprised to see a portion of the real estate being spun off in a REIT fashion as well over the next year or two.

 

This has always been an asset company, not a cash flowing retail company. I think he loves the internet retail business and will hang on to that for the long term and continue to spend capex on that. The remaining assets i believe he would have no problems liquidating/spinning off.

 

As he continues to spinoff the remaining assets, the parent SHLD obviously will be more constrained, and therefore will require a more speedy liquidation.

 

That's what my crystal ball looks like. No position as of yet, but getting more interested by the day.

 

Though we still don't know how clean he will spinoff LE, how much debt to load in it, structure of leases, etc.

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Luke 532 Newbie

Luke 532

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I am wondering why many ppl think Lampert will use SHLD as his future investment flagship . If SHLD continues to shed valuable assets. SHLD itself will be worth less and less. The current owner will get the ownership in many spinoff entities. The total value of these entities plus SHLD may be worth much more than the price of the current SHLD, but how Eddie can continue to use SHLD as the flagship is a question - how can he put the value back into the flagship SHLD ?

 

 

It seems like he's clearly winding down ESL.  I would imagine he still wants to be an investor instead of just run a company, that's why I think his most likely option is to use SHLD as his permanent vehicle.

 

I would think he picks one or two businesses currently within SHLD and focuses on them as his cash flow generator, in addition to trying to make internet retail work (maybe Seritage, maybe Sears Re, etc.).  He then uses that cash to invest and hopefully return somewhere in the ballpark of what he did from 1988-2004.

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heth247 Newbie

heth247

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It seems like he's clearly winding down ESL.  I would imagine he still wants to be an investor instead of just run a company, that's why I think his most likely option is to use SHLD as his permanent vehicle.

 

Didn't Eddie say that he wanted to be remembered as a business (not an investor) man in one interview?

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merkhet Newbie

merkhet

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I have to think that Lampert is nearing his plan to unleash more value out of the real estate and remaining brands in a more quick fashion now. He is spinning off a sizable asset and a profitable portion of an unprofitable overall company. He is lowering his interest coverage ratios, etc. He knows this (he is not a dumb guy), and i think it suggests that he is closer to unlocking more value from remaining real estate and brands. I wouldn't be at all surprised to see a portion of the real estate being spun off in a REIT fashion as well over the next year or two.

 

This has always been an asset company, not a cash flowing retail company. I think he loves the internet retail business and will hang on to that for the long term and continue to spend capex on that. The remaining assets i believe he would have no problems liquidating/spinning off.

 

As he continues to spinoff the remaining assets, the parent SHLD obviously will be more constrained, and therefore will require a more speedy liquidation.

 

That's what my crystal ball looks like. No position as of yet, but getting more interested by the day.

 

Though we still don't know how clean he will spinoff LE, how much debt to load in it, structure of leases, etc.

 

 

This is what I'm starting to think as well. The transformation seems to be picking up speed in the last two years or so.  The part I highlighted above is what is really intriguing to me.

 

 

The author also has clearly not done a ton of work on JOE either, as they assert that Berkowitz can invest JOE's cash and earn far above what the timberland was earning. In fact, according to the agreement he has with JOE, he is very limited in what he can invest the money in, and most of it has to be in fixed income securities. That could change in the future, but until it does...

 

 

You guys might be talking past one another. I think that Berkowitz, even restrained by the agreement, can still beat 2.4% per annum.

 

 

I am wondering why many ppl think Lampert will use SHLD as his future investment flagship. If SHLD continues to shed valuable assets. SHLD itself will be worth less and less. The current owner will get the ownership in many spinoff entities. The total value of these entities plus SHLD may be worth much more than the price of the current SHLD, but how Eddie can continue to use SHLD as the flagship is a question - how can he put the value back into the flagship SHLD ?

 

 

Another situation where people might be talking past one another. I think people here believe that some part of SHLD (plus SHOS & SCC) will be the investment vehicle, but are unsure which part -- if that makes sense.

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Luke 532 Newbie

Luke 532

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It seems like he's clearly winding down ESL.  I would imagine he still wants to be an investor instead of just run a company, that's why I think his most likely option is to use SHLD as his permanent vehicle.

 

Didn't Eddie say that he wanted to be remembered as a business (not an investor) man in one interview?

 

http://www.businessweek.com/stories/2004-11-21/the-next-warren-buffett

In a series of lengthy interviews with BusinessWeek, he makes clear that he also wants to earn respect as a businessman who provides expertise in how a company is run. Like Buffett, he wants chief executives to open their arms and partner with him.

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Luke 532 Newbie

Luke 532

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Some interesting commentary from a different SHLD thread.  It seems like they are making progress in these areas...

 

 

If Lampert's ultimate goal is to remold SHLD into an investment vehicle something like Berkshire Hathaway, how might he do that? 

  • Spin the retail operations off into their own business
  • Own the real estate that the sears retailer uses (or any other use if the retail business is considerably smaller) and take the rent as an income stream
  • Own the income stream from the licensed brands
  • Have an insurer and use the float

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Kiltacular Newbie

Kiltacular

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Interesting thoughts Wellmont - I think the Seritage piece is potentially the most interesting, but I have a tough time getting around the short interest. I know Icahn looks for highly shorted stocks, and I know there is more that goes into it than that, but it seems like the shorts consistently nail it when there is super high short interest. Off the top of my head I'm thinking of: NTRI, BBRY, coal stocks, education stocks. I know the shorts got NFLX wrong, Nokia, banks at the bottom. Maybe it's a sentiment thing - a sign of momentum. So once it turns, then it's time to get in. For example, following the short smart money on gold this year worked even though it appeared the sentiment was negatively lopsided. So idk - is the low in for SHLD? This type of short activity would indicate no. Plus I have a tough time trusting BB on his real estate analysis after Einhorn has pretty clearly demonstrated he is wrong on JOE, plus he's been pounding the table on SHLD for years....

 

who said that berkowitz is wrong on Joe? bruce berkowitz thinks in years not months. if st Joe is at the same stock Price in 3 years from now, than you are right, but your Einhorn Argument is today wrong.

 

berkowitz invited people one time to challenge him on his ideas. he said he wanted a dialogue. he wanted to "kill" his stocks. einhorn wanted to open up discussion and he never got a call back. BB is a very promotional money manager. be careful when he starts promoting one of his ideas.

 

Einhorn has been short JOE since 2007. He is not thinking in months.

 

i still think that this st Joe game is not over now. bruce berkowitz could also make st Joe into one of his Investment vehicle.

 

Good St. Joe update: http://boards.fool.com/ot-st-joe-company-update-31006738.aspx

 

Anyone have reason to strongly disagree?

 

Absolutely. Why would we believe that Einhorn was EXACTLY correct about the value of 2/3 of the land they owned, but at the same time also believe that he is wrong by a huge amount on the value of the other 1/3? He has done so much work on JOE over multiple years that the timberland sale would make me more confident in Einhorn's thesis, not less so.

 

The author also has clearly not done a ton of work on JOE either, as they assert that Berkowitz can invest JOE's cash and earn far above what the timberland was earning. In fact, according to the agreement he has with JOE, he is very limited in what he can invest the money in, and most of it has to be in fixed income securities. That could change in the future, but until it does...

 

Thanks for the response and alternate perspective.

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BTShine Newbie

BTShine

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At some point would mall owners be more willing to repurchase Sears' anchor locations to alleviate 'annoyance factor' of a run down Sears.  It's like the neighborhood pooling their money together to buyout a rundown house and rebuild it.

 

I think there's a story of Steven Roth and Vornado allowing a building to become so run down that one City (Pittsburgh?) was willing to fund a huge portion of the building's redevelopment.  I couldn't find any references to this on the internet... does anyone else know of this story? 

 

 

 

 

 

 

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Kraven Newbie

Kraven

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What kind of "confidential information" it is that Sears is able to get SEC's approval to not disclose?

 

http://www.sec.gov/Archives/edgar/data/1310067/999999999713017181/9999999997-13-017181-index.htm

 

It could be anything.  There is nothing to be read into it absent additional info.  Often confidential info is something related to a company's competitive position.  That is, things they are doing or planning that they wouldn't want competitors to see. 

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heth247 Newbie

heth247

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It could be anything.  There is nothing to be read into it absent additional info.  Often confidential info is something related to a company's competitive position.  That is, things they are doing or planning that they wouldn't want competitors to see.

 

Thanks. I noticed that this is an extension from their 2010 application. Three years later...I wonder what "competitive position" Sears has left... must be the "social media shopping experience" thing...

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Mephistopheles Newbie

Mephistopheles

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It could be anything.  There is nothing to be read into it absent additional info.  Often confidential info is something related to a company's competitive position.  That is, things they are doing or planning that they wouldn't want competitors to see.

 

Thanks. I noticed that this is an extension from their 2010 application. Three years later...I wonder what "competitive position" Sears has left... must be the "social media shopping experience" thing...

 

Maybe it's a $35 billion reinsurance float :D

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