SHLDQ - Sears Holdings Corp

[Matson125]

Why Sears sees salvation in servers

 

 

http://www.tirebusiness.com/article/20130513/NEWS/130519983/why-sears-sees-salvation-in-servers

 

http://www.ubiquityce.com/

[muscleman]

Why Sears sees salvation in servers

 

 

http://www.tirebusiness.com/article/20130513/NEWS/130519983/why-sears-sees-salvation-in-servers

 

http://www.ubiquityce.com/

 

This looks like a cool idea. Have you noticed that since Lambert took over the crown, new changes are coming in a fast pace?

Lease to own, and then the data center. :)

[txlaw]

Why Sears sees salvation in servers

 

 

http://www.tirebusiness.com/article/20130513/NEWS/130519983/why-sears-sees-salvation-in-servers

 

http://www.ubiquityce.com/

 

Very interesting indeed.

[Matson125]

Sears Hometown Annual Meeting Slides

 

http://www.sec.gov/Archives/edgar/data/1548309/000154830913000015/ceoslidesvfinalannualsha.htm

 

[BTShine]

The SHOS slide deck is interesting.  Thanks for posting.

 

 

[Guest wellmont]

Why Sears sees salvation in servers

 

 

http://www.tirebusiness.com/article/20130513/NEWS/130519983/why-sears-sees-salvation-in-servers

 

http://www.ubiquityce.com/

 

This looks like a cool idea. Have you noticed that since Lambert took over the crown, new changes are coming in a fast pace?

Lease to own, and then the data center. :)

 

more throwing stuff at the wall to see what sticks. :)

[muscleman]

Why Sears sees salvation in servers

 

 

http://www.tirebusiness.com/article/20130513/NEWS/130519983/why-sears-sees-salvation-in-servers

 

http://www.ubiquityce.com/

 

This looks like a cool idea. Have you noticed that since Lambert took over the crown, new changes are coming in a fast pace?

Lease to own, and then the data center. :)

 

more throwing stuff at the wall to see what sticks. :)

 

But definitely he is not trying dumb things like what happened in JCP.

[FCharlie]

So Sears wants to transform some of it's 2,000+ stores into data centers.  The article says that a data center can produce $7-$10 million in rent annually.

 

Let's just for fun say that Sears turns 1,000 stores into data centers that each produce $8.5 million of rent and $5 million of profit. That would be $5 billion of profit annually for a $6 billion company.

 

That would leave Sears at a little over one times earnings.

 

Likely? Probably not. Regardless, the point is simply to say that all Sears needs to do is find something, anything productive to do with it's assets and this stock would be a total grand slam home run.

 

 

[rmitz]

So Sears wants to transform some of it's 2,000+ stores into data centers.  The article says that a data center can produce $7-$10 million in rent annually.

 

Let's just for fun say that Sears turns 1,000 stores into data centers that each produce $8.5 million of rent and $5 million of profit. That would be $5 billion of profit annually for a $6 billion company.

 

That would leave Sears at a little over one times earnings.

 

Likely? Probably not. Regardless, the point is simply to say that all Sears needs to do is find something, anything productive to do with it's assets and this stock would be a total grand slam home run.

 

I get your point and I think it's a fine point, but for those where the stores are not owned outright but long term below-market leases, this seems like something that would be prohibited.  I don't know that for sure but it's definitely not what the mall owner would want.  There's also the fact that you'd be having massive layoffs and so on.  Now, suppose you found some way to dramatically downsize the store into the profitable bits + a data center.

 

(FWIW there are also problems with the data center concept in general--there are big economies of scale in being very careful about your building design and location.  That's not to say these couldn't still be profitable, and more profitable than running the stores as-is.)

[txlaw]

I get your point and I think it's a fine point, but for those where the stores are not owned outright but long term below-market leases, this seems like something that would be prohibited.  I don't know that for sure but it's definitely not what the mall owner would want.

 

You might be right about that leased space not being allowed to have these sorts of facilities.  Too bad the annual meeting is passed -- that would have been a great question to ask ESL.

 

I wonder if they could convert space into incubator/office space?  That's kind of a growing market in places like Austin these days, and I could see taking low cost leased RE, dividing it into incubator space, providing shared amenities, and subleasing it out.  Not sure what the profit potential of that is, though.

[ShahKhezri]

This discussion is good.  Rackpace is headquartered in an old mall in San Antonio.  The city gave a very lucrative property tax credit to the Company because of the quality of jobs.  The mall is located in a not so great part of the town, but it was a good deal.

 

 

[ERICOPOLY]

I got sucked in today for 4% position.

 

There ought to be an "ask txlaw" thread as I think he is pretty much always right.

[txlaw]

I got sucked in today for 4% position.

 

There ought to be an "ask txlaw" thread as I think he is pretty much always right.

 

Haha, no wonder there was a spike today at the open! :)

 

Maybe I should start fund. ;D

[jeffmori7]

I got sucked in today for 4% position.

 

There ought to be an "ask txlaw" thread as I think he is pretty much always right.

 

Great idea, I would like to hear more about txlaw trackrecord, investment philosophy and so on!

 

 

eric, what exactly got you in for SHLD? You want to make $ with all Berkowitz ideas? :)

[ERICOPOLY]

eric, what exactly got you in for SHLD? You want to make $ with all Berkowitz ideas? :)

 

I think Sears is an awful retailer that will never get turned around, and thus we may finally be getting somewhere with the stock after Eddie finally gives up on Sears the retailer and gets some other tenant into that real estate.

 

Sort of strange that my logic revolves around how terrible the Sears retail stores are.  I guess I am not that confident with only 4% invested but usually I find it easier to add than to make the initial outlay.

 

 

[plato1976]

Eric,

 

How do you value SEARS ' real estate ?

I feel when all those big box retailers are in trouble - the value of U.S. commercial real estate will be actually much lower than what's indicated now....

 

 

 

eric, what exactly got you in for SHLD? You want to make $ with all Berkowitz ideas? :)

 

I think Sears is an awful retailer that will never get turned around, and thus we may finally be getting somewhere with the stock after Eddie finally gives up on Sears the retailer and gets some other tenant into that real estate.

 

Sort of strange that my logic revolves around how terrible the Sears retail stores are.  I guess I am not that confident with only 4% invested but usually I find it easier to add than to make the initial outlay.

[ERICOPOLY]

Eric,

 

How do you value SEARS ' real estate ?

I feel when all those big box retailers are in trouble - the value of U.S. commercial real estate will be actually much lower than what's indicated now....

 

 

 

eric, what exactly got you in for SHLD? You want to make $ with all Berkowitz ideas? :)

 

I think Sears is an awful retailer that will never get turned around, and thus we may finally be getting somewhere with the stock after Eddie finally gives up on Sears the retailer and gets some other tenant into that real estate.

 

Sort of strange that my logic revolves around how terrible the Sears retail stores are.  I guess I am not that confident with only 4% invested but usually I find it easier to add than to make the initial outlay.

 

Why do you figure that they will all be in trouble?

 

I don't personally value the real estate.  I have this loosely coupled team of free analysts that have done that and I don't think I'll be any better than them so I saved myself the effort.

[plato1976]

well, I believe these analysts are really good to value the "current" value of these commercial real estate;

but I really have some concern about those physical retailers in general

maybe I am just too pessimistic

otherwise I would have jumped in one year ago

 

Eric,

 

How do you value SEARS ' real estate ?

I feel when all those big box retailers are in trouble - the value of U.S. commercial real estate will be actually much lower than what's indicated now....

 

 

 

eric, what exactly got you in for SHLD? You want to make $ with all Berkowitz ideas? :)

 

I think Sears is an awful retailer that will never get turned around, and thus we may finally be getting somewhere with the stock after Eddie finally gives up on Sears the retailer and gets some other tenant into that real estate.

 

Sort of strange that my logic revolves around how terrible the Sears retail stores are.  I guess I am not that confident with only 4% invested but usually I find it easier to add than to make the initial outlay.

 

Why do you figure that they will all be in trouble?

 

I don't personally value the real estate.  I have this loosely coupled team of free analysts that have done that and I don't think I'll be any better than them so I saved myself the effort.

[Matson125]

This should further the RE discussion

 

J.C. Penney stores, real estate worth $4.06 billion: appraisal

 

http://www.reuters.com/article/2013/05/14/us-jcpenney-realestate-idUSBRE94D11D20130514

 

 

[compoundinglife]

Eric,

 

How do you value SEARS ' real estate ?

I feel when all those big box retailers are in trouble - the value of U.S. commercial real estate will be actually much lower than what's indicated now....

 

 

Not Eric, but I will offer a response.

 

Sure real estate prices like anything else will be affected by supply and demand. If SHLD over the long term can turn its idle real estate into cash flow machines, who cares what the real estate market does in the short term. I posted a link in this thread a while back about a blown out building that makes some serious cash from advertising billboards on the side of the building. That is an example of some outside the box thinking of how to take an asset that was idle and viewed as undesirable and turn it into a source of cash flow.

 

Who knows if the data center idea or other ideas will stick but you have a smart long term thinking guy with a bunch of assets that sees greater value in them throwing off cash to him vs selling them. I like that they appear to be thinking outside of the box.

 

My 2 cents.

[FCharlie]

Looks like Bruce Berkowitz picked up another 1.3 million shares of SHLD during Q1

 

Now owns 19.5 million shares.

 

Lampert, Tisch, & Berkowitz own over 82 million shares or just over 77% of SHLD

 

 

[Guest hellsten]

Interesting to see what people were saying about SHLD in 2005-2006:

 

But no less an authority than the investor Warren E. Buffett, whom Mr. Lampert

has held out as his model, has cautioned that Mr. Lampert has a hard job ahead of him.

"Eddie is a very smart guy, but putting Kmart and Sears together is a tough hand," Mr. Buffett says

in a transcript of a conversation he had in May with students from the University of Kansas that is

circulating on investment Web sites.

 

Mr. Buffett noted that few retailers that had long lagged competitors had been successfully revived.

"We would rather look for easier things to do," Mr. Buffett said.

 

"When Eddie got involved in AutoZone, the company already had double-digit market share," he said. That allowed Mr. Lampert

to push the company to cut spending, much as he is doing at Sears. Advertising spending at Sears,

for example, is already down substantially, he said. But because Sears is starting from a weak market

share position, that strategy has some risks, he said.

 

"Eddie has been a great finder of value," Mr. Melich said. "He has yet to take a business and grow it organically."

 

http://www.nytimes.com/2005/08/02/business/02place.html

 

Robert Jaffe from Force Capital Management:

We still think Sears [sHLD] is a bargain at today’s share price [of $168] for

two main reasons. In November of 2004,

[sears Chairman] Eddie Lampert said “If

you’re a retailer and you can’t get 10%

EBITDA margins, you don’t belong in the

business.” Look at other struggling

retailers like J.C. Penney, which went

from 2% EBITDA margins to 11% margins over a span of 18 months. So our

first assumption is that Sears can achieve

10% margins, starting on a run-rate basis

next year.

 

Our second big assumption is based on

the fact that Eddie Lampert is one of the

best capital allocators there is, and we

think he’d like to shrink Sears’ share base

by one-third, to 100 million shares. If

those two things happen – and there are

some logistical difficulties in buying back

so many shares – the shares are worth

two to three times the current price.

 

http://www.valueinvestorinsight.com/12_06Trial.PDF

 

Share count is now 106.39 million (short % is 30.94%). EBITDA margin is not 10%…

 

Force Capital Management biggest position is still Sears plus Sears Hometown. They also own a lot of call options:

http://www.sec.gov/Archives/edgar/data/1317601/000131760113000004/a201303-13f_hr.txt

[BargainValueHunter]

This:

 

Looks like Bruce Berkowitz picked up another 1.3 million shares of SHLD during Q1

 

Now owns 19.5 million shares.

 

Lampert, Tisch, & Berkowitz own over 82 million shares or just over 77% of SHLD

 

Plus This:

 

Share count is now 106.39 million (short % is 30.94%).

 

Equals:

 

What the heck is going to happen to the shorts if Sears reports a surprise to the upside next quarter???

[Myth465]

I almost want to buy just for the squeeze, Im not the best at math but short plus long term holders is more than 100%.

Berkowitz and Lampert should just keep buying.

 

When did the Tisch's get into this.

[prunes]

That 30% is percent of the float not percent of total shares outstanding.