SHLDQ - Sears Holdings Corp

[prevalou]

 

It's funny. I'd say the exact opposite: Don't underestimate a brilliant guy.

 

I think he means don't overestimate someone who has no experience actually running a retail operation.  No doubt he has been brilliant in other aspects of his career.

 

Bezos had no experience of retail before starting AMAZON

 

Come on, we're not really going to compare Bezos to Lampert in terms of retail acumen? 

 

The more I see the way people tilt anything positive in SHLD, the more I want to short this sucker.  The high short interest seems to have it right this time.

 

it is just a fact that Bezos had no real retail experience. I coud say too: don't overestimate a guy who has experience runnig retail operations (RON JOHNSON/APPLE)

[Luke 532]

I just wish some longs would stop making this stock out to be some no brainer 10 bagger.

 

I don't think anybody in the world is arguing this is a "no brainer 10 bagger." 

 

The part that mostly interests me (downside protection) is, in my opinion, a no-brainer.  Investors at these prices will lose very little if any at all... the biggest risk is opportunity cost.  Couple that with upside that is many, many, many multiples of the current price.  For those that can stomach potential opportunity cost risk, from a long-term risk/reward perspective it's as close to a no-brainer as it gets.

[focusinvestor]

This is the kind of statements that Buffett frowned upon when his lieutenants sugar coated their companies performance. Lampert is doing the same (like except for this, we are profitable....). Now next Q, he'll say "except for Mattresses we were profitable..". where does it end?

Agreed. This is bad communication. I hate that.

 

The following might explain why Lampert keeps saying "excluding electronics..."

 

August 2013:

http://www.nugget.ca/2013/08/09/sears-unveils-fresh-look

"Gone from the department store are electronics and window coverings – which are still available in its catalogue and online – in favour of an expanded selection of other products including appliances and mattresses."

 

August 2013:

http://www.postcrescent.com/article/20130820/APC0301/308200292/The-Buzz-Sears-Outlet-open-shortly?nclick_check=1

"The store’s stock will change weekly, but focuses mostly on home appliances and apparel. It doesn’t have TVs or computers."

 

From SHOS report...

"The comparable store sales increase of 1.4% was comprised of a 0.4% decrease in Hometown and a 8.2% increase in Outlet. The 1.4% increase was primarily driven by increased sales in lawn and garden and home appliances partially offset by consumer-electronics comparable sales that were down over 50% (following a planned exit of the business in the majority of Hometown stores), and lower apparel sales in Outlet."

 

Lampert is probably looking to discontinue many electronics from SHLD and SHOS, which would validate his footnotes on the latest presentations about excluding electronics.  So it's not as if he is just randomly picking the worst thing and excluding it, it looks like he's actively moving away from those products and wants to give investors a glimpse of what comps would have looked like without those line of products.

 

This is very a important point that many seem to be overlooking. "Look through" sales growth is working (albeit marginally currently) on the continuing businesses... hopefully margins will follow. He is certainly telegraphing that margins can sustainably improve from here using a variety of levers.

[hardincap]

what are your thoughts on the cfo selling at 33?

 

I just wish some longs would stop making this stock out to be some no brainer 10 bagger.

 

I don't think anybody in the world is arguing this is a "no brainer 10 bagger." 

 

The part that mostly interests me (downside protection) is, in my opinion, a no-brainer.  Investors at these prices will lose very little if any at all... the biggest risk is opportunity cost.  Couple that with upside that is many, many, many multiples of the current price.  For those that can stomach potential opportunity cost risk, from a long-term risk/reward perspective it's as close to a no-brainer as it gets.

[Luke 532]

what are your thoughts on the cfo selling at 33?

 

I just wish some longs would stop making this stock out to be some no brainer 10 bagger.

 

I don't think anybody in the world is arguing this is a "no brainer 10 bagger." 

 

The part that mostly interests me (downside protection) is, in my opinion, a no-brainer.  Investors at these prices will lose very little if any at all... the biggest risk is opportunity cost.  Couple that with upside that is many, many, many multiples of the current price.  For those that can stomach potential opportunity cost risk, from a long-term risk/reward perspective it's as close to a no-brainer as it gets.

 

Tax obligation moves are fairly common among executives at all companies.  Footnote in the filing:

 

1. Represents shares surrendered to the issuer to pay the reporting person's tax withholding obligations incurred in connection with the vesting of restricted stock, the award of which was previously reported.

 

It's neutral: not good, not bad.  Just as Lampert being given shares as compensation is neutral.

[adesigar]

 

It's funny. I'd say the exact opposite: Don't underestimate a brilliant guy.

 

I think he means don't overestimate someone who has no experience actually running a retail operation.  No doubt he has been brilliant in other aspects of his career.

 

Bezos had no experience of retail before starting AMAZON

 

Come on, we're not really going to compare Bezos to Lampert in terms of retail acumen? 

 

The more I see the way people tilt anything positive in SHLD, the more I want to short this sucker.  The high short interest seems to have it right this time.

 

Please do short it I want to buy at lower prices.

 

Upside on a SHLD short does not really interest me.  There are 625 pages of forum discussion on this stock and clearly the market price over that time frame is reflecting a continued weakness in the underlying business.  This falls into the "way too hard" bucket.  I just wish some longs would stop making this stock out to be some no brainer 10 bagger.

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30. 

[Vish_ram]

The gradual decline in liquidity ratios will concern the debt investors. With 2B due in 2018, it'll get interesting if turnaround doesn't materialize. You can bet on fairholme income fund to chip in.

 

[dingo]

Fairholme used JOE to purchase some Sears debt as well

[Picasso]

 

It's funny. I'd say the exact opposite: Don't underestimate a brilliant guy.

 

I think he means don't overestimate someone who has no experience actually running a retail operation.  No doubt he has been brilliant in other aspects of his career.

 

Bezos had no experience of retail before starting AMAZON

 

Come on, we're not really going to compare Bezos to Lampert in terms of retail acumen? 

 

The more I see the way people tilt anything positive in SHLD, the more I want to short this sucker.  The high short interest seems to have it right this time.

 

Please do short it I want to buy at lower prices.

 

Upside on a SHLD short does not really interest me.  There are 625 pages of forum discussion on this stock and clearly the market price over that time frame is reflecting a continued weakness in the underlying business.  This falls into the "way too hard" bucket.  I just wish some longs would stop making this stock out to be some no brainer 10 bagger.

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

[Luke 532]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

[Picasso]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

[Luke 532]

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

 

Buffet said you can't sell 50% or even 20% overnight.  Who said SHLD would try to sell 20% or more of their entire portfolio overnight?  What they CAN do if they want to is sell a chunk of their prime real estate (some of the best 68M square feet in their portfolio) back to malls overnight... the malls have all but said they want it: would be a "bonanza" and quotes like that from Mathrani.

 

Besides, at the end of the video Buffett said he and Munger would be interested in large real estate transactions but doesn't think he'd be able to get a great price because others would be interested, too (i.e. low supply, high demand).

[davidoosnk]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

 

Would seem to me that a spinoff of some of the real estate into a REIT or other separate stock would completely mitigate that problem.

 

[adesigar]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

 

Did you just link it and not listen to it completely?

 

Im sure that a bunch of land in Texas is the same as Prime Mall locations.

Im also sure the fact that Buffett is interested in buying at significant discount (5:20 in the video) is meaningless

He and Charlie would like a LTCM of Real Estate but so would lots of others and they wouldn't be able to get it at a big discount (6:00 in the video) is meaningless.

 

Remember the RE is for downside protection.

 

[Picasso]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

 

Did you just link it and not listen to it completely?

 

Im sure that a bunch of land in Texas is the same as Prime Mall locations.

Im also sure the fact that Buffett is interested in buying at significant discount (5:20 in the video) is meaningless

He and Charlie would like a LTCM of Real Estate but so would lots of others and they wouldn't be able to get it at a big discount (6:00 in the video) is meaningless.

 

Remember the RE is for downside protection.

 

The point is, if you have a bunch of illiquid assets do you want to pay a discount or fair value?  If I give you a store full of antiques "worth" a million dollars, why would you pay anything more than a couple hundred thousand? 

 

These are large illiquid assets we're dealing with in SHLD and you can't extrapolate total values based on a few asset sales.  Even if the 80/20 rule applies and most of the value is in a small amount of the best assets, why the hell would you sell those assets and put it right back in SYW.  Oh but SYW must be working since those SRAC credit default swaps are saying the retail is making a turn for the better.

 

And even if you spin-off the best real estate into a REIT, who is going to be leasing those properties?  How long is it going to take to lease out tens of millions of square feet?  That is also something I want a discount for.

 

You also can't have it both ways with SHLD.  Either you need retail to get better or you need a fast liquidation with the capital paid directly back to you.  The evidence over the past several years indicates liquidation as a less than likely event.  Many of peridotcapital's notes from the recent shareholders meeting point heavily towards a doubling down on the retail turnaround.  As far as optionality, what is stopping Lampert from taking SHLD private at a price you do not view as favorable?  Given the dynamics of his large stake this is a possibility, as we saw in the LBO of Kinder Morgan. 

[BTShine]

 

I don't recall anyone ever saying its a no brainer 10 bagger. It may be way too hard for you, for me its easy. Its a Jockey stock with a tons of upside potential and assets providing downside protection. The reason I want more people shorting Sears is to average down. My cost basis on SHLD adjusted for SHOS, SEARF and LE is under $30.

 

Credit default swaps on SRAC are at the highest levels since 2008.  Excuse me while I scoff at the idea that this is going to be "easy."

 

He wasn't saying success for SHLD would be easy, he was saying that creating the bottom-line of his thesis was easy (as in not too difficult for him to reasonably quantify the risks and rewards).

 

Buffett had a talk which went into this whole large real estate asset thesis.  How does this not apply to SHLD and reduce the perceived margin of safety?

 

https://www.youtube.com/watch?feature=player_detailpage&v=Kq_JApaNam0#t=241

 

Did you just link it and not listen to it completely?

 

Im sure that a bunch of land in Texas is the same as Prime Mall locations.

Im also sure the fact that Buffett is interested in buying at significant discount (5:20 in the video) is meaningless

He and Charlie would like a LTCM of Real Estate but so would lots of others and they wouldn't be able to get it at a big discount (6:00 in the video) is meaningless.

 

Remember the RE is for downside protection.

 

The point is, if you have a bunch of illiquid assets do you want to pay a discount or fair value?  If I give you a store full of antiques "worth" a million dollars, why would you pay anything more than a couple hundred thousand? 

 

These are large illiquid assets we're dealing with in SHLD and you can't extrapolate total values based on a few asset sales.  Even if the 80/20 rule applies and most of the value is in a small amount of the best assets, why the hell would you sell those assets and put it right back in SYW.  Oh but SYW must be working since those SRAC credit default swaps are saying the retail is making a turn for the better.

 

And even if you spin-off the best real estate into a REIT, who is going to be leasing those properties?  How long is it going to take to lease out tens of millions of square feet?  That is also something I want a discount for.

 

You also can't have it both ways with SHLD.  Either you need retail to get better or you need a fast liquidation with the capital paid directly back to you.  The evidence over the past several years indicates liquidation as a less than likely event.  Many of peridotcapital's notes from the recent shareholders meeting point heavily towards a doubling down on the retail turnaround.  As far as optionality, what is stopping Lampert from taking SHLD private at a price you do not view as favorable?  Given the dynamics of his large stake this is a possibility, as we saw in the LBO of Kinder Morgan.

 

Fair points. 

 

As for the 'take private' topic, it's something that was asked at an ASM in the past few years and Mr. Lampert basically said (paraphrase) "anything is possible, but if you look at our history with AN, AZO, etc. you can see that other shareholders had the opportunity to participate in the returns we experienced with these investments."

[ERICOPOLY]

How long is it going to take to lease out tens of millions of square feet? 

 

That's very misleading.  Say you have 50,000 sqft in San Francisco.  It's easier to lease that rather than 500,000 sqft in San Francisco.  One is 10x the size of the other.  No brainer.  You'll lease 50,000 faster than you'll lease 500,000 in the same city.

 

But what if the first 50,000 is in San Francisco, and the next 50,000 is in New York, and Chicago, and Miami, and Los Angeles, and Chicago, and Denver, and Boston, and Houston, and ....?

 

Very misleading to just quote the total number.  It's far more interesting to look at each metro area individually... and then ask... can Sears rent out it's space in that particular metro area without saturating the market?

 

I believe that a listing in New York does not affect the pace at which a San Francisco listing can clear the market.  Don't you?

 

 

 

[Matson125]

84,180 sq ft  lease.  Property Owned by Sears

 

http://jacksonville.com/business/2014-09-02/story/old-time-pottery-open-its-first-jacksonville-area-store-kmart-blanding

[Luke 532]

84,180 sq ft  lease.  Property Owned by Sears

 

http://jacksonville.com/business/2014-09-02/story/old-time-pottery-open-its-first-jacksonville-area-store-kmart-blanding

 

A few more...

– Burlington Coat Factory (kmart) – 5405 University Ave, San Diego CA (~104,000 SF)

– Planet Fitness (Kmart) – 5200 Stockton Blvd, Sacramento CA (~22,000 SF)

– Ansar Gallery (Kmart) – 2505 El Camino Real, Tustin CA (~108,000 SF)

– Corner Bakery (Sears) – Westfield UTC, San Diego CA (~4000 SF)

 

Source: http://www.peridotcapital.com/2014/07/sears-holdings-confirmed-third-party-tenant-leases.html (Chad's blog)

[ni-co]

How long is it going to take to lease out tens of millions of square feet? 

 

That's very misleading.  Say you have 50,000 sqft in San Francisco.  It's easier to lease that rather than 500,000 sqft in San Francisco.  One is 10x the size of the other.  No brainer.  You'll lease 50,000 faster than you'll lease 500,000 in the same city.

 

But what if the first 50,000 is in San Francisco, and the next 50,000 is in New York, and Chicago, and Miami, and Los Angeles, and Chicago, and Denver, and Boston, and Houston, and ....?

 

Very misleading to just quote the total number.  It's far more interesting to look at each metro area individually... and then ask... can Sears rent out it's space in that particular metro area without saturating the market?

 

I believe that a listing in New York does not affect the pace at which a San Francisco listing can clear the market.  Don't you?

 

There are so much misleading and emotional arguments for why you should "short this sucker" that I don't even know where to begin. The funny thing is that some people in this thread seem to think that the different SHLD bull cases are mainstream thinking, while they are the only ones who "know" that SHLD is a cash burning sinkhole and Lampert a completely irrational bozo. Look at the short selling ratio for this stock, guys. Everybody knows these arguments. I don't know how many years ago the last positive article has been publishes about ESL or SHLD.

 

Yes, there are very rational good points for the SHLD bear case and they've all been made here by Chad and others. I found it to be useful to discuss them. But, man, this emotional "SHLD is going to zero" talk really leads to nothing. To all the people out there who think about shorting this stock: think about what the consensus opinion is on it and what your odds are.

[texual]

So far the odds of shorting SHLD stock have been largely in favor of those who did...

 

And I hate to be the SHLD owner who has to point out that they've largely been correct about this company.

[texual]

A LONG TIME AGO IN A GALAXY FAR AWAY...

 

the Bulls began to feel that things 'behind the scenes' were transforming. I don't see it that way anymore. The market doesn't see it. I forgive the market, sometimes hes wrong. But tell me honestly whatever the company has alluded to being improved in the background, does it sound really really minuscule or obfuscated in buzzwords? 73% of transactions are SYW? Are you sure about that? Last I checked, nearly every register rings up a order as if it was basically an online order... I highly doubt people are visiting SYW.com to buy anything at all. Go check out the metrics on Alexa.com for any further proof of who gives a hoot about Shop Your Way. The only reason this program is going to be successful in ESL's eyes, is when every single transaction is done via SYW when you buy something. And until he can say 'we made x million dollars from SYW members using the site' I really have no way to trust anything he says about the program.

 

 

[texual]

Perhaps Sears will finally be the worlds first store where everything you buy IN PERSON, is bought VIA THE WEB. Except it really just amounts to the same thing as before, just now different. And hence, transformation.

 

He is biding time until the real estate cycles begin to pick up, he will pluck the company apart and split and spin out as much as he can until he feels the company can exist profitably and he will benefit from having more permanent capital to work with. There isn't anything wrong with the bear case.

[ni-co]

There isn't anything wrong with the bear case.

 

Did I contest that?

[ni-co]

So far the odds of shorting SHLD stock have been largely in favor of those who did...

 

Because the stock price went down? There is a difference between probability and outcome. All I was saying is that the odds here are not good for the short case.