texual Posted August 1, 2014 Share Posted August 1, 2014 Does the French value investor own shares, or is there any public record of his firm owning shares? What is the story here. Considering making my signature on the forum 'The Sears story continues.' Link to comment Share on other sites More sharing options...
texual Posted August 1, 2014 Share Posted August 1, 2014 Luke, do you suppose SYW has wings? I'm sure Amazon is the de-facto king. But really what has happened in my mind is Amazon became aware of its competitive advantages (ie. tax) for end-customer satisfaction will slowly erode. ESL wrote about this years ago and more states are just going to hop on that shift. I think AMZN built ancillary services to completely immerse the customer in their brand and network. You buy a kindle to get books, but now youve got tablets, and a phone from Amazon tied into Prime. And a set top box. I think the future of Amazon is to become a very REAL company. A company with stores, and showrooms and lockers. I've said it before and again here - the future of retail is NOT online and digital. It requires, and is essential that customers have multiple methods to shop and interact with a brand. They use phones or apps, a tablet, or a branded locker for delivery, Drones, and a website. Hell, they may even want to visit a store - so long as the whole thing is brought to the customer and sold to them as ... wait for it. SHOP YOUR WAY... see what I did there? Amazon is ahead of Sears with years of customer loyalty and cost advantages and tax benefits. But once some of them become harder to retain, retailers will skip being pure online and wish to be physical. Look at all the vendors on Shark Tank. Online outfits wish they could show their products and sell them in key markets. I have no doubt that selling online is here to stay. But don't undersell how tied that can be if specific brands like SYW have the ability to sell themselves as a one stop online/store/locker for customers like Amazon. And more and more I think ESL is starting to prove he has a vision of Sears that isn't like anything we've seen before. In 2010 ESL told us at the meting. 'Five years from now, this company to some will be totally unrecognizable.' And I think 2015 will be an interesting place to be for Sears shareholders if they can prove this model works. Link to comment Share on other sites More sharing options...
texual Posted August 1, 2014 Share Posted August 1, 2014 I leave with one more thought before bed. My own assumption isn't just anecdotal. Read the thoughts of Steve Jobs on opening a store for Apple products. Back when there were hardly that many SKU's, competing with stores that never sold just one type of computer. Oh and they sold the iPod there, maybe some printers and cameras. It was alien. But steve really believed in the concept back when strip malls were kind of dying out, and mall locations still has tons of traffic. He hit the jackpot by using and leveraging mall space. Imagine Apple were just going to say, 'screw it, we dont want to waste time on stores. the future is all online!' and sell their products over the internet. The company could have been totally different. Or what if they just relied on third parties to sell Apple stuff. Could you imagine really wanting to buy Apple from Compusa? I will pick Apple stores over the Best Buy kiosks any day. So the real store meant something real. And Jeff Bezos does from time to time mention how much he would love to do stores. But that they have to work on xyz projects and so much time gets spent on their current model that its hard to just start with stores. He would be a prime candidate to take over Sears' real estate if him and ESL got together. If not, he might have to start from scratch and build stores over the next few decades to maintain their dominance. Sales grow when you add a physical presence. I believe Sears is keeping the real estate and toying with the idea of how to position it, going forward, with SYW as the brand you are interacting with. And who does business with SYW will be the older Sears customers who already shopped there, and the new SYW brand will appeal to more younger customers as they really enhance the offerings. Only potential pitfall: Sears does not have any way to add video services like Amazon Video, or MP3, or streaming on top of SYW MAX.... I am sure there is much more depth to SYW than we realize. I'm just offering a glimpse of what a man like ESL could also be seeing 5-10 years down the road. Link to comment Share on other sites More sharing options...
ni-co Posted August 1, 2014 Share Posted August 1, 2014 To me, I don't consider it float because there isn't any extra cash flow associated with the sale above the normal margin. It's up for debate whether SYW earned points is some kind of float. There are some superficial similarities that have been mentioned (e.g. it sits as a liability on the B/S just like float and it is a loyalty program like Blue Chip Stamps), but when it boils down to WEB's important questions about float (that 1, it is close to cost-less, and 2, it is enduring), these SYW points don't seem to be a valuable form of float (if it even is float). There is a large cost to that float, namely the reduced margins the business can currently earn. The enduring nature of this supposed float is theoretically related to the longer term competitive advantage of the retail business, which so far seems absent to me. I think we have to be clear what we're discussing here. Are we discussing SHLD proclaimed strategy or the momentary situation (running two promotional programs side by side)? If you assume that SYW is going to replace traditional mark-downs – which is SHLD's proclaimed strategy – the money trapped in SYW accounts will be permanent capital for SHLD and be at least neutral with regard to margins (with other things the same it's going to improve margins because of points expiring). Again, under this assumption, the additional SYW cost is going to be close to zero – and so is the cost of the money in customers' accounts. In other words: it's exactly like float. If you assume, however, that the momentary situation of running SYW and traditional mark-downs side by side is going to persist indefinitely, then you are right. It's not going to help margins to do that. I think we can agree that this is not SHLD's strategy. It's certainly up to debate whether they can achieve their goal and transit to SYW only, but that doesn't make the SYW strategy of itself a nonsensical move. Lastly, the arguments in favor of this being float seem circular to me. The points are meant to encourage more shopping in the future, but float proponents are also suggesting that they would rather not see these points to be used, forgotten in the back of a drawer like a booklet of Blue Chip stamps. It's not a circular argument. Nobody says that the points are intended to expire (in which case you'd be right). Of course there are going to be people who simply forget to redeem the points every single time. For them, SYW simply doesn't work. There is a nice short-term side effect of improving margins but if these customers come to the conclusion that they never use their points, SYW and its "mark-downs" will lose its appeal in the long term. This has nothing to do with the float argument, though. Because even if you assume that SYW works perfectly and you redeem all of your points every single time, the mark-down for your next purchase (the purchase you make to redeem your points) is going to be in: points. So, there will always be some amount of points trapped in your account. For you it's points, for SHLD it's cash, because at least initially, you paid with hard $ for them! Link to comment Share on other sites More sharing options...
Luke 532 Posted August 1, 2014 Share Posted August 1, 2014 Luke, do you suppose SYW has wings? I don't know, I'm certainly not counting on it. But I also wouldn't be surprised if it does work. Lampert seems to believe in it a great deal. With that said, I don't think it needs to work for this to still be a great investment. Link to comment Share on other sites More sharing options...
enoch01 Posted August 1, 2014 Share Posted August 1, 2014 I think Blue Chip Stamps is the right way to think about what Lampert is trying to accomplish. I've thought for a while now that he is trying to generate float. It's a completely open question whether he will succeed. Link to comment Share on other sites More sharing options...
texual Posted August 2, 2014 Share Posted August 2, 2014 How can SYW out-compete Amazon Prime? That seems to be the hardest thing for me as an investor. Five years ago Amazon Prime was just a regular service that added a few value saving bonuses on top of the regular amazon customers. Today, Amazon Prime is a streaming service, has a book library that you can lend books with, also now includes free Amazon Music radio. It all ties into their products. I don't see Sears molding ShopYourWay to compete with this model. Amazon is the future of retail and it only is missing the physical presence. Maybe SHLD has a lot to learn from Amazon Prime and Amazon has much to learn about building retail store networks from Sears. I don't know why these two concepts are really influencing my opinion that SYW will grow in leaps and bounds in the next few years. Because ESL is an observer of the industry. He knows what Amazon is doing. He watches all the broadline retailers and discounters and department stores like a hawk. He wants to differentiate and last. Can he beat Prime? Not likely. But can he become the reason Prime loses customers once tax advantages to Amazon products goes away? Food for thought. Otherwise discuss all the various levers in this company. Starting with Lands' End. They seem to be kicking ass. I wish I bought more shares of it. To allow the Sears legacy to continue in their profitable and successful side businesses is a good thing until ESL has the company right-sized. Best of luck to y'all on the investment. I've been a shareholder since the 08 time frame. Link to comment Share on other sites More sharing options...
ni-co Posted August 2, 2014 Share Posted August 2, 2014 How can SYW out-compete Amazon Prime? That seems to be the hardest thing for me as an investor. Five years ago Amazon Prime was just a regular service that added a few value saving bonuses on top of the regular amazon customers. Today, Amazon Prime is a streaming service, has a book library that you can lend books with, also now includes free Amazon Music radio. It all ties into their products. I don't see Sears molding ShopYourWay to compete with this model. Don't underestimate the power of "free". I'd bet less than 20% of Amazon customers are Prime customers. These are Amazon's biggest fans. SHLD should concentrate on the other 80%-90%. Otherwise discuss all the various levers in this company. Starting with Lands' End. They seem to be kicking ass. I wish I bought more shares of it. To allow the Sears legacy to continue in their profitable and successful side businesses is a good thing until ESL has the company right-sized. It's not too late to invest in LE. I made the case for it here. Link to comment Share on other sites More sharing options...
Luke 532 Posted August 2, 2014 Share Posted August 2, 2014 How can SYW out-compete Amazon Prime? For SYW to be successful they don't have to out-compete or beat Amazon, they just have to make a slightly profitable business. The media promotes an all-or-nothing line of thinking with business competition, but in nearly every industry exists more than one successful company. Link to comment Share on other sites More sharing options...
Mephistopheles Posted August 2, 2014 Share Posted August 2, 2014 How can SYW out-compete Amazon Prime? For SYW to be successful they don't have to out-compete or beat Amazon, they just have to make a slightly profitable business. The media promotes an all-or-nothing line of thinking with business competition, but in nearly every industry exists more than one successful company. But there certainly several successful companies in this industry, besides Amazon. I'm not saying SYW won't be, but I wouldn't bet on it. Link to comment Share on other sites More sharing options...
texual Posted August 4, 2014 Share Posted August 4, 2014 'The Sears strategy over the last seven years appears tantamount to that of a liquidation. The company has starved the store base from needed investments and used the resulting cash flows for share buybacks... By comparison, our approach to effectuating change at JCP has principally been to identify and recruit the best retail CEO in the industry to run the company.' Bill Ackman Nov 2011 Link to comment Share on other sites More sharing options...
Luke 532 Posted August 4, 2014 Share Posted August 4, 2014 'The Sears strategy over the last seven years appears tantamount to that of a liquidation. The company has starved the store base from needed investments and used the resulting cash flows for share buybacks... By comparison, our approach to effectuating change at JCP has principally been to identify and recruit the best retail CEO in the industry to run the company.' Bill Ackman Nov 2011 I thought he was against recruiting? Just kidding ;) Link to comment Share on other sites More sharing options...
Luke 532 Posted August 4, 2014 Share Posted August 4, 2014 "Sears (SHLD) remains the Fund’s least successful investment, yet has the highest potential based on our estimates of tangible values." "Patience will pay." -Bruce Berkowitz, 2014 Q2 letter to shareholders Link to comment Share on other sites More sharing options...
Mephistopheles Posted August 4, 2014 Share Posted August 4, 2014 "Sears (SHLD) remains the Fund’s least successful investment, yet has the highest potential based on our estimates of tangible values." "Patience will pay." -Bruce Berkowitz, 2014 Q2 letter to shareholders Thanks, do you have a copy of the letter? Link to comment Share on other sites More sharing options...
Luke 532 Posted August 4, 2014 Share Posted August 4, 2014 "Sears (SHLD) remains the Fund’s least successful investment, yet has the highest potential based on our estimates of tangible values." "Patience will pay." -Bruce Berkowitz, 2014 Q2 letter to shareholders Thanks, do you have a copy of the letter? It's a public document. Just bookmark this page: http://www.fairholmefunds.com/letters Link to comment Share on other sites More sharing options...
texual Posted August 4, 2014 Share Posted August 4, 2014 More or less Ackman did what the market assumed was the path to success - 'retailer' 'guru' and 'track records' couldn't save JCP. in fact they are in a much worse position today than sears. and I believe their real estate is locked by Goldman Sachs in exchange for financing. it's actually so incredible to see ESL and his patient views on the industry prove themselves over years. Him investing in getting Mickey Drexler or upgrading billions of dollars on the stores and remodeling would have destroyed sears long before jcp. Ackman looks like a fool and Johnson - who I actually like - prove that retail has fundamentally changed in some ways that make department stores even harder to fix. I'll take ESL's approach with SYW over the Ackman/jcp strategy. Link to comment Share on other sites More sharing options...
Mephistopheles Posted August 4, 2014 Share Posted August 4, 2014 "Sears (SHLD) remains the Fund’s least successful investment, yet has the highest potential based on our estimates of tangible values." "Patience will pay." -Bruce Berkowitz, 2014 Q2 letter to shareholders Thanks, do you have a copy of the letter? It's a public document. Just bookmark this page: http://www.fairholmefunds.com/letters Thanks Luke. Link to comment Share on other sites More sharing options...
Parsad Posted August 4, 2014 Share Posted August 4, 2014 More or less Ackman did what the market assumed was the path to success - 'retailer' 'guru' and 'track records' couldn't save JCP. in fact they are in a much worse position today than sears. and I believe their real estate is locked by Goldman Sachs in exchange for financing. it's actually so incredible to see ESL and his patient views on the industry prove themselves over years. Him investing in getting Mickey Drexler or upgrading billions of dollars on the stores and remodeling would have destroyed sears long before jcp. Ackman looks like a fool and Johnson - who I actually like - prove that retail has fundamentally changed in some ways that make department stores even harder to fix. I'll take ESL's approach with SYW over the Ackman/jcp strategy. I don't think either strategy can be viewed as a success by any means. Cheers! Link to comment Share on other sites More sharing options...
CorpRaider Posted August 4, 2014 Share Posted August 4, 2014 Man if you group the fannie and freddie investments as all one (binary outcome) investment, then FAIRX has what....five positions? Link to comment Share on other sites More sharing options...
Mephistopheles Posted August 4, 2014 Share Posted August 4, 2014 More or less Ackman did what the market assumed was the path to success - 'retailer' 'guru' and 'track records' couldn't save JCP. in fact they are in a much worse position today than sears. and I believe their real estate is locked by Goldman Sachs in exchange for financing. it's actually so incredible to see ESL and his patient views on the industry prove themselves over years. Him investing in getting Mickey Drexler or upgrading billions of dollars on the stores and remodeling would have destroyed sears long before jcp. Ackman looks like a fool and Johnson - who I actually like - prove that retail has fundamentally changed in some ways that make department stores even harder to fix. I'll take ESL's approach with SYW over the Ackman/jcp strategy. I don't think either strategy can be viewed as a success by any means. Cheers! +1 While ESL may not have invested in the stores, he has spent (potentially wasted) billions on SYW points. Link to comment Share on other sites More sharing options...
hyten1 Posted August 4, 2014 Share Posted August 4, 2014 i get file error when trying to access fairhomes docs, anyone? Link to comment Share on other sites More sharing options...
fareastwarriors Posted August 4, 2014 Share Posted August 4, 2014 i get file error when trying to access fairhomes docs, anyone? It worked fine for me. Link to comment Share on other sites More sharing options...
ni-co Posted August 4, 2014 Share Posted August 4, 2014 I don't think either strategy can be viewed as a success by any means. Yet. Link to comment Share on other sites More sharing options...
Luke 532 Posted August 4, 2014 Share Posted August 4, 2014 Lampert's funds distribute 2.43M+ shares of AutoNation to partners 7/31/14. Lampert's funds distribute 136K+ shares of AutoNation to Lampert 7/31/14. http://www.sec.gov/Archives/edgar/data/350698/000118143114028180/xslF345X03/rrd414010.xml Link to comment Share on other sites More sharing options...
texual Posted August 5, 2014 Share Posted August 5, 2014 You should do a little thing where you track his funds concentration in SHLD over time as a percentage of all assets. That would be interesting to see. And at what rate will it take before he basically is 'ALL IN' with very little AN left, what will be left besides Sears? Will he shut down his fund and distribute everything except what he owns personally, and advise his clients to do whatever they like with SHLD? Link to comment Share on other sites More sharing options...
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