SHLDQ - Sears Holdings Corp

[spin]

rimm_never_sleeps:

"could this be a Machiavellian way for for EL to accumulate more shares for his pa"

 

Well there are some who say that this is what Eddie did last year by driving down the price via the PRs on DTA writeoff, mentioning cash draws on revolver then taking his management fee in SHLD shares and further buying on market.

 

http://www.sec.gov/Archives/edgar/data/860585/000120919112003365/xslF345X03/doc4.xml

 

I'm not so sure this year though that this is the play.

 

compoundinglife:

"As for the free float, if it increases, who cares?"

 

Well for one, any one who wants to buy large chunks of stock with out materially moving the price would care very much what the free float was - Long-term structural shorts for example.

 

Or perhaps Eddie wants to increase the free float so SHLD can start taking down another chunk of shares in the future with out moving the price up.

 

Those two constituents would care very much about the free float.

 

"but a short squeeze is really any part of the SHLD thesis."

 

I'm thinking that the a previous argument that the long-terms structural shorts had no where to go when they wanted to cover, were somehow trapped in their short position, that they would turn in on themselves and eat their young if you will; those arguments seem to be unsupportable now.

 

Spin

[txlaw]

I don't particularly care about the short position one way or the other because I don't think they can take down the company's ability to obtain financing.

 

I think that ESL's increased disclosure about the plan finally demonstrates that he's not trying to screw over minority shareholders.

[ShahKhezri]

I don't particularly care about the short position one way or the other because I don't think they can take down the company's ability to obtain financing.

 

I think that ESL's increased disclosure about the plan finally demonstrates that he's not trying to screw over minority shareholders.

 

That's a good point, a take under has a lower probability now than before.

[compoundinglife]

compoundinglife:

"As for the free float, if it increases, who cares?"

 

Well for one, any one who wants to buy large chunks of stock with out materially moving the price would care very much what the free float was - Long-term structural shorts for example.

 

Right. I was expressing that opinion as a long who is unlikely to acquire a market moving amount of shares. I understand that parties interested in shorting SHLD would care about this. I really just figured no one on this thread would be shorting SHLD so my response was more of "why does anyone on this thread care?". That is a fair point.

 

Or perhaps Eddie wants to increase the free float so SHLD can start taking down another chunk of shares in the future with out moving the price up.

 

Those two constituents would care very much about the free float.

 

You are right they would or potentially do care. From my perspective what happens in the short term with SHLD and how it trades is not very interesting to me unless it provides cheaper buying opportunities. The one thing I would that would concern me is ESL selling a large block for no apparent reason.

 

"but a short squeeze is really any part of the SHLD thesis."

 

I'm thinking that the a previous argument that the long-terms structural shorts had no where to go when they wanted to cover, were somehow trapped in their short position, that they would turn in on themselves and eat their young if you will; those arguments seem to be unsupportable now.

 

Spin

I don't know enough about trading to say if this increased FF make those arguments unsupportable or not. It still seems like a pretty small FF to me. I would be interested to hear what folks with knowledge in that domain have to say. But at the end of the day I will buy if/when I like the price. What ever else happens... happens.

[texual]

ESL for whatever its worth to you has shown through filings that Lamperts personal stake in Sears has grown tremendously through the years. He has purchased shares in his own account, or taking his payment from the hedge fund in the form of shares. He also owns shares in his ownership of the firm which each year appears to get larger. When his partners are cashing out they can take their shares and sell them or have cash, and that's up to them.

 

Not so different from Warren Buffett when he liquidated his partnership over a few years until the end was his partners having a choice, theres some Berkshire shares you own... you could sell em... but I think I want to stick around the Mill's for a few years, up to you!'

 

His hedge fund just completed the reduction of Autozone - they may own zero shares at this point in time. He is reducing Autonation shares. And he is dispensing the shares to his limited partners and he is also growing his ownership of the firms remaining shares. Basically ESL has to rid itself of a lot of the excess money and partners in order for Eddie to get out of this with a huge, 20, 30% ownership of SHLD at the end.  Until that happens (and I believe this plan was in motion for the past several years) he will continue to run the investments and return money to investors in the form of shares until the remainder is all his, including his personal accounts.

 

Buffett owned about 33% of Berkshire Hathaway before he was content with his control and decided the rest could be his partners but it took a while to get all the partners cashed out and given the option to have shares or sell them back to Buffett ;)

 

[drewdalton]

Here in Canada, the supermarket chain Loblaws is creating a REIT. 

 

http://business.financialpost.com/2012/12/06/loblaw-to-create-one-of-canadas-largest-reits

 

 

Loblaw’s real estate portfolio is 47-million square feet with an estimated market value of $9-billion to $10-billion, executives said. It owns 70% of its retail footprint in Canada and leases about 30% from other landlords. 

 

 

 

SHLD owns and/or has long term leases on 90m square feet of real estate.  One can see how Bruce comes up with a range of values for SHLD's real estate of between $90 and $160 per share. 

 

[txlaw]

Here in Canada, the supermarket chain Loblaws is creating a REIT. 

 

http://business.financialpost.com/2012/12/06/loblaw-to-create-one-of-canadas-largest-reits

 

 

Loblaw’s real estate portfolio is 47-million square feet with an estimated market value of $9-billion to $10-billion, executives said. It owns 70% of its retail footprint in Canada and leases about 30% from other landlords. 

 

 

 

SHLD owns and/or has long term leases on 90m square feet of real estate.  One can see how Bruce comes up with a range of values for SHLD's real estate of between $90 and $160 per share.

 

Very interesting.  Thanks for posting.

[compoundinglife]

Here in Canada, the supermarket chain Loblaws is creating a REIT. 

 

http://business.financialpost.com/2012/12/06/loblaw-to-create-one-of-canadas-largest-reits

 

 

Loblaw’s real estate portfolio is 47-million square feet with an estimated market value of $9-billion to $10-billion, executives said. It owns 70% of its retail footprint in Canada and leases about 30% from other landlords. 

 

 

 

SHLD owns and/or has long term leases on 90m square feet of real estate.  One can see how Bruce comes up with a range of values for SHLD's real estate of between $90 and $160 per share.

 

Where did you get that 90m number from? BB had around 250M on his slide deck (pre spin offs) and last CC they said "over 200m".

[Hawk4value]

texual:

 

I found your evaluation of SHLD very interesting. It always seemed to me that Eddie would evantually increase his personal stake in SHLD to the point where he controlls it. I think that he also will slowly monetize Shld's assets and transform the company into a "Berkshire" type of entity with permanent capital. I am a big proponent of investing with smart owner/operators with superior ability to allocate capital. Although I am not willing to invest in Shld right now because of my distaste for any investment that has to compete with the Targets, Walmarts, and Costcos of this world, if Shld becomes Eddie's investment vehicle I would be very interested.

 

Am I on the right track??

[drewdalton]

Where did you get that 90m number from? BB had around 250M on his slide deck (pre spin offs) and last CC they said "over 200m".

 

 

Compounding

 

The 200m plus figure is correct.  The Loblaws REIT highlights the potential value of SHLD's real estate. 

[compoundinglife]

Sears Automotive is re-launching it road handler tire brand:

 

http://www.tirebusiness.com/article/20121205/NEWS/121209965/sears-relaunching-roadhandler-brand

[texual]

Take your time, SHLD isn't going anywhere just yet. I'd also listen to Bruce Berkowitz at the U of Miami discussion. He mentions that the secret sauce to making great money is permanent capital and if he could, he would. He has some ideas brewing - but its quote " the reason Warren Buffett dissolved his partnership and got involved in a beat up textile mill, and another reason an investor would be suddenly buying shares of Sears Holdings,"

 

Funny you guys ask, because that's the same reason I would own the shares too. The end result is a beat up retailer with some good assets and a good investor at the helm. No other reason exists to own SHLD outside of that core logic. The real estate assets are nothing without a good dealmaker who can connect with partners to sell or renovate the spaces. Nobody will turn around the retail assets, because those will improve only with a housing turnaround. I wouldn't own shares without a little bit of external faith that ESL is eventually going to own 33% personally and ditch the hedge fund to run SHLD as a permanent capital vehicle.

 

 

[jay21]

Take your time, SHLD isn't going anywhere just yet. I'd also listen to Bruce Berkowitz at the U of Miami discussion. He mentions that the secret sauce to making great money is permanent capital and if he could, he would. He has some ideas brewing - but its quote " the reason Warren Buffett dissolved his partnership and got involved in a beat up textile mill, and another reason an investor would be suddenly buying shares of Sears Holdings,"

 

Funny you guys ask, because that's the same reason I would own the shares too. The end result is a beat up retailer with some good assets and a good investor at the helm. No other reason exists to own SHLD outside of that core logic. The real estate assets are nothing without a good dealmaker who can connect with partners to sell or renovate the spaces. Nobody will turn around the retail assets, because those will improve only with a housing turnaround. I wouldn't own shares without a little bit of external faith that ESL is eventually going to own 33% personally and ditch the hedge fund to run SHLD as a permanent capital vehicle.

 

If that's the thesis, why not wait until it comes to fruition (i.e. EL finally starts investing the CFs)?

[texual]

That I cannot answer. Both Bruce Berkowitz and I appear to be foolish on this matter.

 

However I will add that I find it odd - even strange that ESL shut down his offices in CT, and moved his life to FL. But not just anywhere in FL - literally within a short distance of both Fairholme and Bruce Berkowitz. Now I don't want anyone to read into that more than what I just said. But if you are a fan of Bruce, and I am - you will notice that he speaks with reverence of many of his investments.

 

However if you know anything about JOE (which he has owned for perhaps a shorter time than SHLD), he used to speak very highly of. While he still owns it and made a slight reduction, he really hasn't talked about it for the past two years. Many interviews later and I think JOE just isn't on the discussion platform of banks and insurance. But SHLD, he is almost poetic about - and hes owned it with terrible results since 2005.

 

All of this has got to make one wonder.

[Myth465]

Bruce is tough to follow, he did the same thing with CNQ and FUR. He just sales out, moves on, and doesnt really explain what happened.

[JRH]

Bruce is tough to follow, he did the same thing with CNQ and FUR. He just sales out, moves on, and doesnt really explain what happened.

 

I had the impression he sold out of FUR because they started issuing equity.  He had definitely come off as an Ashner fan prior to that.  Similar in a way to when he sold out of Penn West (late '07, if I recall correctly) - someone asked him and he implied that they made a dilutive deal.

 

Sorry, getting a little off-topic.

[JRH]

However I will add that I find it odd - even strange that ESL shut down his offices in CT, and moved his life to FL.

 

FWIW, Florida has no state income tax for persons and a fairly low corporate income tax.  I was under the impression that was one of the things that took Fairholme down there.

[Myth465]

Bruce is tough to follow, he did the same thing with CNQ and FUR. He just sales out, moves on, and doesnt really explain what happened.

 

I had the impression he sold out of FUR because they started issuing equity.  He had definitely come off as an Ashner fan prior to that.  Similar in a way to when he sold out of Penn West (late '07, if I recall correctly) - someone asked him and he implied that they made a dilutive deal.

 

Sorry, getting a little off-topic.

 

Bruce praises then just kind of moves on without offering much of an explanation. I think he left FUR for the same reason I did, IV and issuing equity, but he never says anything really publicly about investments he leaves. He is not evasive, just doesnt really put it on the table.  One day he may do the same with SHLD one day.

[Matson125]

http://www.newswire.ca/en/story/1087819/sears-canada-announces-sale-of-its-leasehold-interest-in-medicine-hat-mall

 

Sears Canada Announces Sale of its Leasehold Interest in Medicine Hat Mall for $43 million.

 

 

[MYDemaray]

However I will add that I find it odd - even strange that ESL shut down his offices in CT, and moved his life to FL. But not just anywhere in FL - literally within a short distance of both Fairholme and Bruce Berkowitz.

 

doesn't seem odd to me....that's the only part of Florida I'd move to, and I was born and raised in FL!

 

Also, aren't ESL's offices still up and running in CT?  It's just ESL himself who has transplanted.

 

That said, your point is taken...they will be socializing (though I hear from first-hand sources that if you take ESL to a baseball or football game, he just works the whole time).

[StubbleJumper]

http://www.newswire.ca/en/story/1087819/sears-canada-announces-sale-of-its-leasehold-interest-in-medicine-hat-mall

 

Sears Canada Announces Sale of its Leasehold Interest in Medicine Hat Mall for $43 million.

 

 

Interesting.  A quick Google search suggests that's just north of $500/ square foot for 82,168 square feet.  Presumably what they sold was the remaining portion of what was probably originally a 99 year lease that would have been signed in about 1979?

 

I would not have guessed that a lease in Medicine Hat would have that much value...

 

SJ

[Matson125]

http://www.newswire.ca/en/story/1087819/sears-canada-announces-sale-of-its-leasehold-interest-in-medicine-hat-mall

 

Sears Canada Announces Sale of its Leasehold Interest in Medicine Hat Mall for $43 million.

 

 

Interesting.  A quick Google search suggests that's just north of $500/ square foot for 82,168 square feet.  Presumably what they sold was the remaining portion of what was probably originally a 99 year lease that would have been signed in about 1979?

 

I would not have guessed that a lease in Medicine Hat would have that much value...

 

SJ

 

Neither would I.  The reason is that I live in the Greater Toronto Area and every major mall has Sears as an anchor.  If a lease in Medicine Hat is worth $40 million imagine what Yorkdale, Sherway Gardens, Upper Canada Mall or even 1 floor at the Eaton Centre would go for!

 

Michael

[drewdalton]

Regarding Sears Canada, what is Calvin McDonald going to do with the proceeds from these potentially on going property sales?  As SHLD shareholders we have all been distributed shares of Sears Canada.  I would like to see Calvin return a significant portion of this money to shareholders either through share buybacks or dividends.  I know he is re-investing in the stores but how much capital should be allocated to the stores at a potentially low return?

 

 

 

 

[dcollon]

TORONTO, Dec. 12, 2012 /CNW/ - The following issues have been halted by IIROC:

Company: Sears Canada Inc.

TSX Symbol: SCC (all issues)

 

Reason: Pending News

 

Halt Time (ET): 04:28: PM ET

 

[drewdalton]

Sears Canada Announces Extraordinary Dividend

 

 

TORONTO, Dec. 12, 2012 /CNW/ - Sears Canada Inc. (SCC.TO) announced today that its Board of Directors declared that an extraordinary cash dividend of $1.00 per share on all Common Shares of the Company, or approximately $102 million, will be paid on December 31, 2012 to shareholders of record as at the close of business on December 24, 2012.

 

Sears Canada hereby notifies shareholders that it designates the full amount of the dividend to be paid on the common shares, to be an "eligible dividend" as defined in subsection 89(1) of the Income Tax Act (Canada), and in any similar provincial and territorial tax legislation.

 

______________________________________________________________________________

 

Thank you Calvin and Eddie Lampert, of course.  It looks like Eddie only wants to pay 15% federal tax on his dividend and Florida has a 0% state tax.