MYDemaray Posted January 17, 2013 Share Posted January 17, 2013 ...Simon and Sears are two totally different business models. Collecting rent across a large number of properties is more predictable than being a retailer, thus it attracts a higher multiple. Link to comment Share on other sites More sharing options...
valuecfa Posted January 17, 2013 Share Posted January 17, 2013 It wouldn't take too much more in share repurchases to take out the entire float of this company. And to think there is over $400 million in short interest at the moment. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 17, 2013 Share Posted January 17, 2013 What's up with the near put/call parity these days? I was getting used to there always being call premiums at 1/2 the cost of put premiums (giving you 2x upside for your 1x downside). What changed in the calculus to bring this back into line? Did the short sellers find shares to borrow or something? Link to comment Share on other sites More sharing options...
muscleman Posted January 17, 2013 Share Posted January 17, 2013 Does anyone know how expense it is to layoff one worker in Sears? From their Q3 presentation: Made 86,000 lump sum offers totaling $2.0 billion This means that each person is being offered a mere 23k for the buyout? That is much lower than GM's buyout of over 100k during 2006-2008. I am happy with this number, but could anyone tell me why is it such a big difference between auto workers and retail workers? Link to comment Share on other sites More sharing options...
Sportgamma Posted January 17, 2013 Share Posted January 17, 2013 Howard Davidowitz is a man with a hammer and he absolutely nails it... http://finance.yahoo.com/blogs/daily-ticker/lululemon-still-stuff-howard-davidowitz-160601498.html Link to comment Share on other sites More sharing options...
muscleman Posted January 17, 2013 Share Posted January 17, 2013 I wouldn't bet against his insider purchase and I think there's a lot of cash here to distribute but only when there's an economic need to do so. Pundits make it look like sears is about to die the past 20 years and yet they largely missed out on how badly best buy turned out. In 2009 I said best buy would go private or go bankrupt before sears. But the SHLD investment is very long term to me. Bruce is all in. Eddies all in and pundits think I should read their link bait articles and pontificating something they can barely understand outside of same store sales. There's a lot more going on at sears than a retailer. I'm buying more shares. Bruce is all in? I see SHLD is his 2nd largest holding as of Q4 2012, but that is still just 13% of his entire fund. Link to comment Share on other sites More sharing options...
biaggio Posted January 17, 2013 Share Posted January 17, 2013 Howard Davidowitz is a man with a hammer and he absolutely nails it... http://finance.yahoo.com/blogs/daily-ticker/lululemon-still-stuff-howard-davidowitz-160601498.html Thanks for posting. If I can summarize: 1. management matters a whole lot but 2. retail is very hard, you have to be a genius (or just lucky) to guess exactly right what consumer is going to want Seems to agree with most here that SHLD in an orderly liquidation. Personally I think you could put the greatest retailer of all time + he would probably not turn SHLD around---I do like the underlying commercial RE + the fact that 2 of the best cap allocators are putting their money in. Link to comment Share on other sites More sharing options...
Guest wellmont Posted January 17, 2013 Share Posted January 17, 2013 Howard Davidowitz is a man with a hammer and he absolutely nails it... http://finance.yahoo.com/blogs/daily-ticker/lululemon-still-stuff-howard-davidowitz-160601498.html he sees retail stocks from one perspective only. same store sales. he's a broken record and simply a mouthpiece for the media when they want to present the negative case on shld. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 17, 2013 Share Posted January 17, 2013 At least Berkowitz thinks that Sears real estate is valued at $160 per share. Lately you've begun talking about the real estate value of Sears, which accounts for 10% of your fund.The value of Sears (SHLD) [which trades near $xx] would be over $160 a share if the land on the books was fully valued. You can look back at recent transactions and ask a question: How can Sears close stores and generate hundreds of millions of dollars of cash? It gets at the inventory. The liquidation value of its inventory approaches its stock price. Forget the real estate. Source: Berkowitz interview in FORTUNE 2012-11-26 http://finance.fortune.cnn.com/2012/11/26/bruce-berkowitz-fairholme/?section=money_markets&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_markets+%28Markets%29 ----- How Sears Is Worth More Dead 2012-11 http://investorplace.com/2012/11/how-sears-is-worth-more-dead/ Any conversation about the true intrinsic value of SHLD stock begins with real estate. Between Sears and Kmart, the company has 241 million square feet of retail space, 37% of it owned and the rest in long-term, below-market leases. Berkowitz values its real estate at $160 per share, or $17 billion. Simon Property Group (NYSE:SPG) has 245 million square feet of retail space (almost an identical amount), and its market cap is $46.5 billion, 10 times Sears’ current valuation. Clearly, it would take years to bring the above scenario to fruition, so it’s safe to say $41.4 billion isn’t what Sears would actually extract from its real estate. Especially when you consider that the longer it takes for Sears to enter the death spiral, the greater the decay in the value of those leases. Link to comment Share on other sites More sharing options...
JRH Posted January 17, 2013 Share Posted January 17, 2013 EDIT: apologies, if you read the two quotes in the previous post, they are saying slightly different things. 1) The book value is $160/share. 2) The Property is worth $160 share as one component of the balance sheet. I was assuming #2. Quick estimate - replacing the Property & Equipment line with that value in the October 10-Q gives you a book value of ~$130/share. For curiosity's sake, if Berkowitz is overestimating the discrepancy by 2x (between his estimate and the reported number), the book value would be $84/share. Obviously they are burning through cash but that at least gives some rough context to margin of safety. Link to comment Share on other sites More sharing options...
texual Posted January 17, 2013 Share Posted January 17, 2013 Jcp vs shld I'd guess there's a difference when you account for the fact that jcp has no private label brands that come close to the power in craftsman or kenmore. How jcp is going to differentiate from Macy's is astounding. Looks like their big innovation in new jcp is to rebuild a few parts of the store to look like Macy's. I don't see this strategy as original. Would you really shop at jcp over Macy's for any particular brand. Unless you have something nobody else has then you can't just copy it and expect a miracle. Square footage sales will improve at jcp but lampert was right not to get carried away and let emotions take away the long term cash. In a few years we might see jcp as having lost in the long term when these stores remodels appear stale or in need of a refresh. If sears figures out how to improve profits with fewer stores and integrated retail experiences they'll be a shining example of how to really run a company. I don't believe the majority of investors who think this is a liquidation because if that we're the case lampert would be long dead before he can close down half the operations here. You've got to believe the company is actually focused on making a retail effort here or I wouldn't even invest because you'll be wrong when five years from now they are still turning it around. Link to comment Share on other sites More sharing options...
bargainman Posted January 18, 2013 Share Posted January 18, 2013 At a recent interview with Bezos he had some insights. One that stuck with me is that you have to acknowledge the change and the unknowable and try to focus on things that will be true 10 years or more from now. One of the things he said was that people want stuff for cheap, that's not going to change.. So that's one thing they focus on, running a tight ship, super low margins doing things like the kindle which are essentially loss leaders etc. Eddie always talks about customer service and 'having it your way', but last time I had to buy something Sears sold I looked elsewhere and the price was cheaper (amazon/costco) or the warranty/return policy was better (costco). I don't know, but it seems to me that he's caught halfway between a discounter and a service oriented retailer, and failing at both, or at least flailing. Just some thoughts... I used to own them but no more.. Might jump back in.. I'm torn.. I wish they had warrants or that the Leaps weren't so expensive! Link to comment Share on other sites More sharing options...
muscleman Posted January 18, 2013 Share Posted January 18, 2013 Regarding SHLD's Q3 2012, it says adjusted EBITDA for the first nine months is 197 M, in which it added back 199 M interest expense. Could anyone tell me why? It is calculating as if interest expense does not exist? On the other hand, it added back over 600 M in D&A. Normally, how long can a store renovation last before they have to do it again? I don't think they can add 100% of D&A back. Is Eddie still trying to revive the retail business? Link to comment Share on other sites More sharing options...
Sunrider Posted January 18, 2013 Share Posted January 18, 2013 Regarding SHLD's Q3 2012, it says adjusted EBITDA for the first nine months is 197 M, in which it added back 199 M interest expense. Could anyone tell me why? It is calculating as if interest expense does not exist? On the other hand, it added back over 600 M in D&A. Normally, how long can a store renovation last before they have to do it again? I don't think they can add 100% of D&A back. Is Eddie still trying to revive the retail business? Well, I think the answer is in your question - EBITDA - as in *before* INTEREST, TAXES and DEPRECIATION, hence they're adding it back in their calculation, no? C. Link to comment Share on other sites More sharing options...
muscleman Posted January 18, 2013 Share Posted January 18, 2013 Regarding SHLD's Q3 2012, it says adjusted EBITDA for the first nine months is 197 M, in which it added back 199 M interest expense. Could anyone tell me why? It is calculating as if interest expense does not exist? On the other hand, it added back over 600 M in D&A. Normally, how long can a store renovation last before they have to do it again? I don't think they can add 100% of D&A back. Is Eddie still trying to revive the retail business? Well, I think the answer is in your question - EBITDA - as in *before* INTEREST, TAXES and DEPRECIATION, hence they're adding it back in their calculation, no? C. Well, in that sense, it is true. Perhaps the question I am asking is wrong. I see that they are using adjusted EBITDA as their management operating metric, which I disagree with. I think it needs to deduct interest expense, and then add back only a portion of the D&A. I mean, the real estate depreciation can be fully added back, but D&A for their brands and store renovation expenses cannot be fully added back. Anyway, I agree that 2012's performance has improved. And now that housing market becomes hot again, I think SHLD will probably start to make the turnaround in 2013. Link to comment Share on other sites More sharing options...
PlanMaestro Posted January 18, 2013 Share Posted January 18, 2013 Most e-tailers don't want to deal with selling large appliances due to the logistics. Odd business models: this guy shops at Ikea for you and assembles the flatpacks for an hourly rate. http://www.fearlessmike.com/index.html Link to comment Share on other sites More sharing options...
muscleman Posted January 23, 2013 Share Posted January 23, 2013 Sorry to ask a newbie question, what is the relationship between housing market and sears'sales? Link to comment Share on other sites More sharing options...
texual Posted January 23, 2013 Share Posted January 23, 2013 Nothing. But there is a correlation between rising home sales and consumer spending and in a rising tide all boats rise. At sears any lift in sales and profitability would create a magical situation for several reasons. One of the reasons is the massive share repurchases and concentrated ownership along with short interest make it a potent stock for earnings per share when the economy is chugging along. And it will. Give it a few years and expect a company that in good times can earn 10 dollars a share with a shares outstanding of just under 100 million and reducing. People buy craftsman tools in housing upturns. But they really buy appliances when housing is good. Sears being the number one appliance retailer gets that distinction of being a housing recovery play but I think there's a little more to it. Share repurchases magnify both earnings and losses going ahead. For now I just think theyll need to keep calm and be strategic about he repurchases but I would have loved to see another 10% reduction in float during 2012. Link to comment Share on other sites More sharing options...
texual Posted January 23, 2013 Share Posted January 23, 2013 Can we also do a rundown analysis of ESLs letter which should be here shortly in February. And who plans to be at the meeting perhaps we can organize a set of questions that our board would like to ask. Maybe if two or three of us attend we can ask him a few questions from the group? Should be an interesting year for the meeting since the CEO is now chairman and vice versa. He's going to have to do a lot of work starting feb 1. Link to comment Share on other sites More sharing options...
muscleman Posted January 23, 2013 Share Posted January 23, 2013 Can we also do a rundown analysis of ESLs letter which should be here shortly in February. And who plans to be at the meeting perhaps we can organize a set of questions that our board would like to ask. Maybe if two or three of us attend we can ask him a few questions from the group? Should be an interesting year for the meeting since the CEO is now chairman and vice versa. He's going to have to do a lot of work starting feb 1. Well my questions are: No.1 What is his timeline for turning this into a baby Berkshire, now that housing market has rebounded strongly? No.2 Does he intend to stay on the CEO job for the long term, or is he seeking someone to replace his current CEO role? Link to comment Share on other sites More sharing options...
FCharlie Posted January 23, 2013 Share Posted January 23, 2013 Can we also do a rundown analysis of ESLs letter which should be here shortly in February. And who plans to be at the meeting perhaps we can organize a set of questions that our board would like to ask. Maybe if two or three of us attend we can ask him a few questions from the group? Should be an interesting year for the meeting since the CEO is now chairman and vice versa. He's going to have to do a lot of work starting feb 1. Well my questions are: No.1 What is his timeline for turning this into a baby Berkshire, now that housing market has rebounded strongly? No.2 Does he intend to stay on the CEO job for the long term, or is he seeking someone to replace his current CEO role? And his answers will be : No. 1 No comment No.2 He will do whatever is best for shareholders. All decisions are made with the idea of doing what is best for long term shareholders. I say this because I've watched him be asked about the Buffett comparison. I've watched him directly and immediately pass on the question. I've also watched him be asked specific questions and although he may speak for ten minutes in response, he isn't going to lay out a concrete response to a question like that. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 24, 2013 Share Posted January 24, 2013 Google Déjà Vu for Sears CEO: Fix Kmart or http://professional.wsj.com/article/SB10001424127887323783704578247762547817102.html?mod=WSJ_hp_LEFTWhatsNewsCollection Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 24, 2013 Share Posted January 24, 2013 Eddie Lampert: Why Are We Biting the Hand that Feeds Us? VIDEO 5:29min http://www.nantucketproject.com/eddie-lampert Eddie Lampert, CEO of ESL Investments and Chairman of Sears Holding Corporation spoke at the 2011 Nantucket Project and stood up for business in his talk – “Why do we bite the hand that feeds us?” Link to comment Share on other sites More sharing options...
muscleman Posted January 29, 2013 Share Posted January 29, 2013 Eddie Lampert: Why Are We Biting the Hand that Feeds Us? VIDEO 5:29min http://www.nantucketproject.com/eddie-lampert Eddie Lampert, CEO of ESL Investments and Chairman of Sears Holding Corporation spoke at the 2011 Nantucket Project and stood up for business in his talk – “Why do we bite the hand that feeds us?” What has this to do with SHLD? Link to comment Share on other sites More sharing options...
CONeal Posted February 1, 2013 Share Posted February 1, 2013 Looks like Kmart found a way to turn their sales around for stores. :D http://www.huffingtonpost.com/2013/02/01/pot-in-kmart-10-pounds-marijuana-delivered-seattle_n_2597824.html?utm_hp_ref=crime& Link to comment Share on other sites More sharing options...
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