SHLDQ - Sears Holdings Corp

[TeddyLampert]

Funny how a consensus seems to have developed that people should:

 

1) sell SHLD / buy SHLDV and/or

2) sell LE

 

Each of these actions is a vote on the prospects of LE and current valuation. I took another look at LE. I'm interested in understanding the value of LE based on normalized earnings. 

 

I've attached an image from my spreadsheet. It was easier to paste an image than to create a HTML table. In the first column, I show the last reported results for LE. The second column is my attempt at normalizing the earnings. The idea behind the proforma column is simple: I want to figure out what the earnings would be if we assume 10% EBIT margins. I make no other assumptions for simplicity. I assume revenues will stay at 2013 levels. I assume gross margins are the same. At 10% EBIT margins, EPS is 25% higher because of all the fixed cost operating leverage in the business. EPS is $2.50 normalized.

 

From a valuation perspective, at today's share price of around $30, you get multiples that look reasonable. See the middle column. These valuations are not cheap, nor are they overly expensive. Would you add at these levels? Probably not. Would you sell because they are irrationally high? No as well. I can understand someone selling LE because they think it's just a sideshow to the main course (all the heaps of real estate in SHLDV), but I think it's wrong to sell at current levels because you're worried about valuation.

 

There's also been a lot of talk about how LE compares with some other retailers. I'm not much of an expert on retailers, so I put together this second spreadsheet to look at profitability metrics, specifically margins and return on capital. I also looked at comparative valuations for good measure.

 

You'll see that LE earns ok margins and very good returns on invested capital. You can follow all the numbers, which I got from Bloomberg. I used 2010 numbers for J Crew because it was acquired in 2011. The only adjustment I have made to calculating ROC is I have adjusted for the rental expense (with retailers, you have to add capitalized rental expense to the invested capital denominator and similarly adjust the numerator at least 50% of the rental expense).

 

Long story short, LE earns ROC that are twice as good as ANN and EXPR, which is what you would expect from a business that is in fact asset lite and has most sales coming from a direct business model. COLM and JCrew earn EBIT margins that are better than LE. That just seems wrong; I don't see any good reason why LE can't earn better EBIT margins than 8%. I chose to be conservative by assuming 10% EBIT margins in the above normalization analysis.

 

Some other thoughts: Has anyone heard Mr. Huber, the CEO of LE speak? Has he done a roadshow or given any interviews? I'm not sure he has. I haven't found anything using a Google search, nor is there broker research mentioning his future plans. According to a filing (thanks Dowfin1), Mr. Huber is going to get $1 mm worth of shares at some point in time. That's not a lot; it's about as much as his $800K annual base salary. But read below about the timing of his share grant:

 

Subject to approval of the Compensation Committee, you will receive a grant of restricted stock valued at $1,000,000 under the Sears Holdings Corporation 2006 Stock Plan. The number of restricted shares granted will be determined using the market closing price of Sears Holdings shares on the grant date.

 

The grant date will be the first business day of the month following the later of (a) the date upon which we receive both your executed Executive Severance Agreement (see below) and the approval of the Compensation Committee of this grant or (b) your start date.

 

So, basically, Mr. Huber gets to choose when he is awarded his stock. It's the "later" of his start date or the date he signs his severance contract. If I were in his shoes, I'd want the share price to go down as much as possible so I can get more shares. He has an incentive at this point to keep mum about his plans.

 

I imagine there are a lot of other investors out there who will dump LE because they are indifferent or bothered by the lack of information, thus creating the very spin-off dynamics that we all hanker for. On the other hand, there is also going to be plenty of short covering of LE as well. What this means is that it's hard to bet which direction the stock's going to go in the short term. 

 

On balance, I'm comfortable holding onto my LE shares at current levels. I do have a price in mind at which I will sell.

[MrB]

"Long story short, LE earns ROC that are twice as good as ANN and EXPR, which is what you would expect from a business that is in fact asset lite and has most sales coming from a direct business model. COLM and JCrew earn EBIT margins that are better than LE. That just seems wrong; I don't see any good reason why LE can't earn better EBIT margins than 8%. I chose to be conservative by assuming 10% EBIT margins in the above normalization analysis."

 

Not sure whether asset lite is the way forward they are choosing. See goal 3 from article below.

Also, 10% EBIT looks aggressive to me if you look at the 10 year averages for various comps below. Data from Reuters.

 

http://www.madisonmagazine.com/core/pagetools.php?pageid=21829&url=%2FMadison-Magazine%2FDecember-2013%2FFrom-Sailing-Gear-to-Leopard-Print-Lands-End-at-50%2Findex.php%3Fcparticle%3D2%26siarticle%3D1&mode=print

 

JCP 2.4%

KSS 10.5%

M 5.9%

NXT-LN 15.9%

DDS 3.5%

BONT 3.1%

JWN 10.3%

ROST 9.5%

VFC 12.7%

ANN 4.3%

EXPR 7.3%

COLM 11.9%

AVG 8.1%

 

[Luke 532]

Funny how a consensus seems to have developed that people should:

 

1) sell SHLD / buy SHLDV and/or

2) sell LE

 

It is likely that most people on this thread were initially attracted to Sears Holdings for reasons outside of their retail operations.  I, for one, would have no desire to own Sears or any other retailers if retail operations was the core of the thesis (which it is for LE, but certainly not for SHLD).  I always have been and probably always will be much more comfortable investing in financials and real estate companies than retail, technology, etc.  With that said, one could argue investing in SHLD is investing in all of the categories mentioned: financials (Sears Re), real estate (SHLD's real estate portfolio), retail (Sears), technology (SYW, integrated retail)... but the most prominent of those is the real estate.

[DCG]

For someone who doesn't follow Sears very closely, what's the difference between SHLD and SHLDV shares?

[TeddyLampert]

"Long story short, LE earns ROC that are twice as good as ANN and EXPR, which is what you would expect from a business that is in fact asset lite and has most sales coming from a direct business model. COLM and JCrew earn EBIT margins that are better than LE. That just seems wrong; I don't see any good reason why LE can't earn better EBIT margins than 8%. I chose to be conservative by assuming 10% EBIT margins in the above normalization analysis."

 

Not sure whether asset lite is the way forward they are choosing. See goal 3 from article below.

Also, 10% EBIT looks aggressive to me if you look at the 10 year averages for various comps below. Data from Reuters.

 

http://www.madisonmagazine.com/core/pagetools.php?pageid=21829&url=%2FMadison-Magazine%2FDecember-2013%2FFrom-Sailing-Gear-to-Leopard-Print-Lands-End-at-50%2Findex.php%3Fcparticle%3D2%26siarticle%3D1&mode=print

 

JCP 2.4%

KSS 10.5%

M 5.9%

NXT-LN 15.9%

DDS 3.5%

BONT 3.1%

JWN 10.3%

ROST 9.5%

VFC 12.7%

ANN 4.3%

EXPR 7.3%

COLM 11.9%

AVG 8.1%

 

 

I have a couple of thoughts about the above.

 

1) LE was earning 11.7% margins as recently as 2010 (see Ex 99.1)

 

https://www.bamsec.com/filing/119312514100537/2?cik=799288.

 

Looking at how the margins jump around leads me to think this business has a lot of operating leverage, which is often a source of variant perception. Earnings can make quantum leaps up or down because of this, which is why I am so focused on understanding margins for LE.   

 

2) I don't agree that the best approach to honing in on the right margins is to average the margins for a smattering of disparate retailers. JCPenney is very different from ANN for example. Choosing comps is an art and has to be tailored to the business model in question. It is obviously difficult to identify a pure comp but logically, one would expect a direct seller to have better operating margins than a physical retailer (apologies as this point has been made ad nauseum)

 

3) I realize that to make the margin comparison comparable across companies, you have to adjust for rent. Different companies have different real estate ownership / lease profiles. So it is probably a better idea to add back rental expense to EBIT in order to get "EBITR" (earnings before interest, taxes, and rent) to get to something comparable. I have pasted it as an attachment. From this angle, LE still looks like it is under-earning.

 

4) I went to Reuters to look at the data that you cited for the retailers, and while I did not find the 10 year averages, I checked out a few of those companies and saw that there are 5 year operating margins available. Those numbers are different from yours. For example: Ross's 5 year average OP margin is 12% (vs. your 9.5%). It also says the industry 5 year average margin is 10.7% and the sector margin is 11.4% (all higher than your 8% average).

 

http://www.reuters.com/finance/stocks/financialHighlights?symbol=ROST.O

 

I also eyeballed a few retailers using Bloomberg, looking at margins across 10 years and the averages also seem to be different (higher) than what you have cited.

 

5) I noted that same Madison Magazine article in my post on dated March 13, 2014, 09:58:08 PM. The article was written relatively recently (Dec 2013).  I don't have any more insight into management's plan than you do, so I wait with baited breath what they end up announcing. I am working under the assumption that expanding their physical retail footprint would be asset intensive and hence ROIC-dilutive. Obviously this is just an assumption and isn't always true. There are physical retailers that earn exceptional ROICs (ANF for example). In any case, I am waiting just like everyone else for additional information.

 

6) I don't know if Huber is a good capital allocator. In the article he talks about "data mining customers" so he is sounding like a Moneyball CEO but... we all know exceptional capital allocators are very rare... I'm not even sure if he's a great retailer for that matter. 

[TeddyLampert]

https://blog.searsholdings.com/leadership-viewpoint/an-owner-driven-transformation/

 

This was a bit of tease:

 

We have $18 billion in assets on our balance sheet including a vast real estate portfolio that is unencumbered and whose value has been the subject of much speculation. I am not going to provide a view on the so-called “market value” of our domestic real estate – but its “accounting value” is reflected on our financial statements at about $5 billion. I would note that we have sold a few properties in the past two years in the US and Canada for about $1.4 billion – more than demonstrating the potential value of this real estate.

 

I think this article was written to counter the Bloomberg article out today about Eddie/ESL decreasing its commercial paper commitments.

[Mephistopheles]

For someone who doesn't follow Sears very closely, what's the difference between SHLD and SHLDV shares?

 

SHLD - SHLDV = .30075*LEDMV

[peridotcapital]

Just curious if you consider their ability to sell other places, ie. outdoor stores or other dept stores.  It also looks like there could be a margin improvement story, ebitda was 200+m not long ago with similar sales numbers.  Also, 82% of sales are online/catalog, so I would think tighter expense and inventory control are entirely possible and wouldn't be difficult to achieve as a stand alone. 

 

As to asset light, i think 15m in capex over the last several years is pretty light (vs. EXPR which has been north of $70m).  They did something like $115in OCF last year and at 15m capex, we're looking at maybe 100m.  With maybe 36m in incremental costs for interest and standalone costs (21m after tax), it'd sit around 79m in FCF in the TTM.  At 975m in equity value we're looking at an 8% FCF yield, which should improve as the company delevers from the div and drives operational improvements it is incented to get as a standalone.  Not to mention the possibility they sell into other places.  I also think you need to take into account that most of the asset side of things is in intangibles and goodwill $650m, which would distort your evaluation of asset light.  I'm not an accountant, but I actually think those wound up on the balance sheet because of what SHLD paid to acquire the company.

 

My point is, I understand why its priced this way and with all the levers they could pull it seems to me that its fairly priced, it could actually work nicely here if they execute.  The best comp to me seems to be COLM, which trades 13+ times with a similar sales/margin profile.  Comparing it to ANN or EXPR which have huge fixed expenses and greater capex requirements probably isn't appropriate.  There's also probably pretty good private market value here to a VFC or a PVH.

 

I think the core issue here is whether you believe LE to be a retailer or a wholesaler. As the business stands today, I don't see how comps like VFC, PVH, RL, or COLM make sense for LE. That would imply that LE is largely a wholesaler, which it is not. They are a direct to consumer retailer. Some LE bulls believe they could open free-standing stores as a way to grow post-spin (which I think is smart, as it helps you gain new customers vs simply keeping your existing loyal ones, and something Eddie should have tested in my view), but that would only make it even more obvious that it is a retailer and not a wholesaler. That is why I personally would not pay VFC/PVH/RL/COLM multiples for LE (and it is also why I don't think a company like VFC would buy them --- VFC does not buy brands that are only retail and turn them into wholesale -- they typically buy wholesale brands and get them into more stores).

 

Now, all of that said, is there a great business opportunity for the new management team to take LE and move it towards the wholesale model? Absolutely. Would that help growth and also boost the multiple by diversifying its avenues of distribution? Absolutely. But is there any evidence that this is going to be the strategy post-spin? No. And until it is I would not be willing to "pay up" for that potential.

 

But if this company fetches a 10-12x EBITDA multiple long term, I will be more than happy to be completely wrong, as the SHLD longs who hold the stock will do very well with it. I just don't see any precedent for that to happen, so I am not willing to bet on it.

[TheEnterprisingInvestor]

Just curious if you consider their ability to sell other places, ie. outdoor stores or other dept stores.  It also looks like there could be a margin improvement story, ebitda was 200+m not long ago with similar sales numbers.  Also, 82% of sales are online/catalog, so I would think tighter expense and inventory control are entirely possible and wouldn't be difficult to achieve as a stand alone. 

 

As to asset light, i think 15m in capex over the last several years is pretty light (vs. EXPR which has been north of $70m).  They did something like $115in OCF last year and at 15m capex, we're looking at maybe 100m.  With maybe 36m in incremental costs for interest and standalone costs (21m after tax), it'd sit around 79m in FCF in the TTM.  At 975m in equity value we're looking at an 8% FCF yield, which should improve as the company delevers from the div and drives operational improvements it is incented to get as a standalone.  Not to mention the possibility they sell into other places.  I also think you need to take into account that most of the asset side of things is in intangibles and goodwill $650m, which would distort your evaluation of asset light.  I'm not an accountant, but I actually think those wound up on the balance sheet because of what SHLD paid to acquire the company.

 

My point is, I understand why its priced this way and with all the levers they could pull it seems to me that its fairly priced, it could actually work nicely here if they execute.  The best comp to me seems to be COLM, which trades 13+ times with a similar sales/margin profile.  Comparing it to ANN or EXPR which have huge fixed expenses and greater capex requirements probably isn't appropriate.  There's also probably pretty good private market value here to a VFC or a PVH.

 

I think the core issue here is whether you believe LE to be a retailer or a wholesaler. As the business stands today, I don't see how comps like VFC, PVH, RL, or COLM make sense for LE. That would imply that LE is largely a wholesaler, which it is not. They are a direct to consumer retailer. Some LE bulls believe they could open free-standing stores as a way to grow post-spin (which I think is smart, as it helps you gain new customers vs simply keeping your existing loyal ones, and something Eddie should have tested in my view), but that would only make it even more obvious that it is a retailer and not a wholesaler. That is why I personally would not pay VFC/PVH/RL/COLM multiples for LE (and it is also why I don't think a company like VFC would buy them --- VFC does not buy brands that are only retail and turn them into wholesale -- they typically buy wholesale brands and get them into more stores).

 

Now, all of that said, is there a great business opportunity for the new management team to take LE and move it towards the wholesale model? Absolutely. Would that help growth and also boost the multiple by diversifying its avenues of distribution? Absolutely. But is there any evidence that this is going to be the strategy post-spin? No. And until it is I would not be willing to "pay up" for that potential.

 

But if this company fetches a 10-12x EBITDA multiple long term, I will be more than happy to be completely wrong, as the SHLD longs who hold the stock will do very well with it. I just don't see any precedent for that to happen, so I am not willing to bet on it.

 

Fair comment on the wholesale vs. retail model, but given their 82% DTC, and margin history, one could argue that their margins should be much better than they are today.  I also wonder if EBITDA is too far up the IS given how capital light this is.  Perhaps an EBIT multiple would be more appropriate or even a simple earnings multiple.  NI was 78m in 2013, adding back interest and pub co costs (est. 35m pre & 21m post tax) gets me to about $57m, or $1.78/sh.  Free cash flow is actually higher than that.  Given how high incremental margins must be, going from gross margin almost right to the op margin line, any sales lift would do wonderful things to the results.  I don't see how this couldn't work out very nicely.  I understand that SHLD holders like their real estate story and capital allocator story, but this is actually a nice little business.  Comparing it to more highly levered B&M retail is also unfair.  If you look at how much capital is actually tied up to generate the sales they do, its very little.  A lot of the assets are goodwill/intangibles (presumably the goodwill is from when SHLD actually paid up for them). 

 

As an aside, does anyone know when institutional investors can step into the WI market?  Volume on both of these issues have been quite low, its mostly retail people trading around from what I can see.  Do institutions have to wait for the record date to pass to begin trading in the WI market? 

[OracleofCarolina]

https://blog.searsholdings.com/leadership-viewpoint/an-owner-driven-transformation/

 

Some thoughts from the CFO, nothing really new, but nice summary of where we stand now

[TheEnterprisingInvestor]

Just curious if you consider their ability to sell other places, ie. outdoor stores or other dept stores.  It also looks like there could be a margin improvement story, ebitda was 200+m not long ago with similar sales numbers.  Also, 82% of sales are online/catalog, so I would think tighter expense and inventory control are entirely possible and wouldn't be difficult to achieve as a stand alone. 

 

As to asset light, i think 15m in capex over the last several years is pretty light (vs. EXPR which has been north of $70m).  They did something like $115in OCF last year and at 15m capex, we're looking at maybe 100m.  With maybe 36m in incremental costs for interest and standalone costs (21m after tax), it'd sit around 79m in FCF in the TTM.  At 975m in equity value we're looking at an 8% FCF yield, which should improve as the company delevers from the div and drives operational improvements it is incented to get as a standalone.  Not to mention the possibility they sell into other places.  I also think you need to take into account that most of the asset side of things is in intangibles and goodwill $650m, which would distort your evaluation of asset light.  I'm not an accountant, but I actually think those wound up on the balance sheet because of what SHLD paid to acquire the company.

 

My point is, I understand why its priced this way and with all the levers they could pull it seems to me that its fairly priced, it could actually work nicely here if they execute.  The best comp to me seems to be COLM, which trades 13+ times with a similar sales/margin profile.  Comparing it to ANN or EXPR which have huge fixed expenses and greater capex requirements probably isn't appropriate.  There's also probably pretty good private market value here to a VFC or a PVH.

 

I think the core issue here is whether you believe LE to be a retailer or a wholesaler. As the business stands today, I don't see how comps like VFC, PVH, RL, or COLM make sense for LE. That would imply that LE is largely a wholesaler, which it is not. They are a direct to consumer retailer. Some LE bulls believe they could open free-standing stores as a way to grow post-spin (which I think is smart, as it helps you gain new customers vs simply keeping your existing loyal ones, and something Eddie should have tested in my view), but that would only make it even more obvious that it is a retailer and not a wholesaler. That is why I personally would not pay VFC/PVH/RL/COLM multiples for LE (and it is also why I don't think a company like VFC would buy them --- VFC does not buy brands that are only retail and turn them into wholesale -- they typically buy wholesale brands and get them into more stores).

 

Now, all of that said, is there a great business opportunity for the new management team to take LE and move it towards the wholesale model? Absolutely. Would that help growth and also boost the multiple by diversifying its avenues of distribution? Absolutely. But is there any evidence that this is going to be the strategy post-spin? No. And until it is I would not be willing to "pay up" for that potential.

 

But if this company fetches a 10-12x EBITDA multiple long term, I will be more than happy to be completely wrong, as the SHLD longs who hold the stock will do very well with it. I just don't see any precedent for that to happen, so I am not willing to bet on it.

 

One other point on the comparisons.  JOSB agreed to buy Eddie Bauer recently, though I'm not sure on the status of the deal with the MW acquisition, which is very similar in product and demographic and they paid 12.7x EBITDA, because there's so much D&A there, they actually paid 18x EBIT.  There's more capital intensity in that business.  JOSB justified it by saying it was only 9.whatever times ebitda because they expected 25m in synergies from the deal, we know how finding those can actually go. 

[BTShine]

This might be the quote of the day ---

 

"I would note that we have sold a few properties in the past two years in the US and Canada for about $1.4 billion – more than demonstrating the potential value of this real estate." - Robert Schriesheim CFO of Sears Holdings

 

 

 

[heth247]

Funny how a consensus seems to have developed that people should:

 

1) sell SHLD / buy SHLDV and/or

2) sell LE

 

I don't think that was the consensus developed. If there was one, it is that LE is a good business and has good potential to be much more profitable after spin off from SHLD. The disagreement is on what price would you like to pay for this business, for now.

 

 

[moody202]

Funny how a consensus seems to have developed that people should:

 

1) sell SHLD / buy SHLDV and/or

2) sell LE

 

I don't think that was the consensus developed. If there was one, it is that LE is a good business and has good potential to be much more profitable after spin off from SHLD. The disagreement is on what price would you like to pay for this business, for now.

 

While LE is a good business and can produce great results with the right leadership, I just don't see enough value/opportunity here to lock up my dollars!

[Luke 532]

This might be the quote of the day ---

 

"I would note that we have sold a few properties in the past two years in the US and Canada for about $1.4 billion – more than demonstrating the potential value of this real estate." - Robert Schriesheim CFO of Sears Holdings

 

+1

[LC]

Apologies if this was posted previously:

http://www.bloomberg.com/news/2014-03-24/lampert-stops-buying-sears-ious-as-cash-burns-corporate-finance.html

[ni-co]

Apologies if this was posted previously:

http://www.bloomberg.com/news/2014-03-24/lampert-stops-buying-sears-ious-as-cash-burns-corporate-finance.html

 

Lampert is benefiting as assets are separated, including the spin-off of the Lands’ End clothing unit this month, which will give Sears stockholders 0.3 of a share in the new entity for each Sears share held. A Sears subsidiary will receive a $500 million dividend from the spin-off.

 

“They’re transferring valuable assets to the shareholders, and he’s the largest shareholder,” Mary Ross Gilbert, an analyst at Imperial Capital LLC in Los Angeles who has a “sell” recommendation on Sears shares, said in an interview.

 

I always thought they'd distribute LE to all shareholders. Yet Lampert seems to be the only beneficiary – while at the same time "reducing his exposure" by buying shares…  :o

[BTShine]

Advice to anyone looking to buy/sell in the next week or two. 

 

Check with your broker on the rules of this spin-off.    I don't want to pass along specific legal advice advice on this board, but just call your broker to learn the rules before trading if you have any sliver of doubt or question as to how this spin-off works. 

 

I hadn't looked into it closely enough, and was surprised to see the price today essentially unchanged considering yesterday was the 'record date'.  I'm glad my brokerage house explained the situation when I called this morning.

[thepupil]

Advice to anyone looking to buy/sell in the next week or two. 

 

Check with your broker on the rules of this spin-off.    I don't want to pass along specific legal advice advice on this board, but just call your broker to learn the rules before trading if you have any sliver of doubt or question as to how this spin-off works. 

 

I hadn't looked into it closely enough, and was surprised to see the price today essentially unchanged considering yesterday was the 'record date'.  I'm glad my brokerage house explained the situation when I called this morning.

 

I found this helpful, and the mathematical relationship between SHLD, SHLDV, and LEDMV.

 

http://groupssa.com/understandingdividenddates.html

 

"Here's the big (and confusing) difference:  While the ex-dividend date is indeed set by the exchange, it occurs not before the record date, but after.  In fact, the ex-dividend date is not even before the payment  date!  By rule, the ex-dividend date is one business day after  the payment date.  (In such cases the term deferred ex-date  applies.) ......

 

Note: Although this page is an explanation of how cash dividend dates work, deferred ex-dates are also used, under certain circumstances, with stock dividends, spinoffs and warrant issues.  With those types of distributions the 25% threshold is not a factor, as often times the value of a spinoff or warrant is not known at the time of declaration.  However, any time a deferred ex-date is applicable, no matter if the distribution is in cash or securities, the deferred ex-date rules explained here, including the due bill process, apply....

 

In cases of a deferred ex-date, the only  function of the record date is to determine on which shares the dividend is paid.  Because of that -- and this is a critical point -- it is the ex-dividend date that determines who qualifies for the dividend, not  the record date."

[Luke 532]

Short interest: 17.09M as of 3/14 (down from 17.42M as of 2/28).

http://www.nasdaq.com/symbol/shld/short-interest

[BTShine]

Still really high.

[TheEnterprisingInvestor]

Short interest: 17.09M as of 3/14 (down from 17.42M as of 2/28).

http://www.nasdaq.com/symbol/shld/short-interest

 

So of the roughly 8m in tradeable LE float, roughly 5.1m shares are sold short.  Wow.

[heth247]

Short interest: 17.09M as of 3/14 (down from 17.42M as of 2/28).

http://www.nasdaq.com/symbol/shld/short-interest

 

So of the roughly 8m in tradeable LE float, roughly 5.1m shares are sold short.  Wow.

 

Why assume "8M tradeable LE float"? Why assume that ESL/BB/Chow will not sell their LE shares after spin off?

[Guest wellmont]

Short interest: 17.09M as of 3/14 (down from 17.42M as of 2/28).

http://www.nasdaq.com/symbol/shld/short-interest

 

So of the roughly 8m in tradeable LE float, roughly 5.1m shares are sold short.  Wow.

 

Why assume "8M tradeable LE float"? Why assume that ESL/BB/Chow will not sell their LE shares after spin off?

 

great point. the tradeable float is way different for LE than it is for shld. LE is a dividend.

[BTShine]

Short interest: 17.09M as of 3/14 (down from 17.42M as of 2/28).

http://www.nasdaq.com/symbol/shld/short-interest

 

So of the roughly 8m in tradeable LE float, roughly 5.1m shares are sold short.  Wow.

 

Why assume "8M tradeable LE float"? Why assume that ESL/BB/Chow will not sell their LE shares after spin off?

 

great point. the tradeable float is way different for LE than it is for shld. LE is a dividend.

 

Fair points.  On the other hand, it's possible that new investors buy LE that aren't currently involved with SHLD.  Very possible there's a new major holder that wants to take a stake in LE.