SHLDQ - Sears Holdings Corp

[muscleman]

exactly what we are concerned here.

that's why we need to see a signal that this guy finally decides want to liquidate

in some way

 

Hey guys, stupid question probably, but I'm quite confused between RBS, ESL and Eddy Lampert personal holdings...can someone help me to sort it out? If my understanding is good, RBS is reducing its stake in Sears and Lampert is buying them personally or through ESL, which would be the same?

 

I am also confused about the relationship between RBS and ESL. I know ESL is a fund that Lambert manages. I also know that Lambert is buying shares from ESL, probably due to redemption requests. But when I search in dataroma.com for the SHLD ownership, I also saw RBS partners there with Lambert as the manager.

 

IIRC - RBS is a sub-fund / managed / owned of ESL.  Basically Eddie manages both funds.  If you want to separate what Lampert owns from what his fund owns - just treat ESL/RBS etc (think there might be a couple of other sub funds too) as his fund holdings and his personal holdings are what he himself owns.

 

on another note - Lampert visited our school last year for a talk.  we got to ask him questions at the end and he was asked about RE value / liquidation and he basically noted that while RE liquidation seemed like a good floor valuation when he bought the assets, once he got in there he realized the sheer scale of the company and the effect a liquidation would have on lives and couldn't bring himself to do it without trying everything he could to salvage it first. said that the thought of putting over 300,000 individuals out of a job and thus affecting over a 1m people was pretty harsh and just not something he wanted to do at this point in his life.  thought it was interesting to hear him basically say that a liquidation wasn't on the table.

 

note that he did make it quite clear that he does think the company can be turned around and there is tremendous value / cash flows a well run retailer can generate.

 

I think he has already started a slow liquidation. He closed a lot of stores last year, but he didn't announce any plans for this year. Unlike Buffet, Eddie seems to be a retail special investor, so he may find it even harder to give up, with past success in Gap, AutoZone, and now AutoNation. Buffet is different because he is never a textile expert. He succeeded in various investments before he came across the Berkshire trouble.

 

With that said, I expect the 2nd quarter to catch up the pent up demand of the first quarter due to cold weather, and also Sears is the only retailer offering lease to own, so this could impact the sales positively from this point on. I am not worried about Sears at all. I think he needs to close the Kmart stores soon.

[ERICOPOLY]

Unlike Buffet, Eddie seems to be a retail special investor, so he may find it even harder to give up, with past success in Gap, AutoZone, and now AutoNation. Buffet is different because he is never a textile expert. He succeeded in various investments before he came across the Berkshire trouble.

 

I don't know how to compare Buffett's textile to Lampert's retail.

 

Textile manufacturing simply left the country.  It didn't get beat by better US competition.

Retail has not left the country.  Sears and KMart are just getting whooped.  Walmart is doing just fine in the US.

[muscleman]

Unlike Buffet, Eddie seems to be a retail special investor, so he may find it even harder to give up, with past success in Gap, AutoZone, and now AutoNation. Buffet is different because he is never a textile expert. He succeeded in various investments before he came across the Berkshire trouble.

 

I don't know how to compare Buffett's textile to Lampert's retail.

 

Textile manufacturing simply left the country.  It didn't get beat by better US competition.

Retail has not left the country.  Sears and KMart are just getting whooped.  Walmart is doing just fine in the US.

 

True. I can't imagine how retail industry would leave the country.

I am comparing these two in terms of their personal feelings and past experiences with the companies. Lambert is mostly a retail investor but Buffet made good investments in various areas.

 

So I  think it is easier for Lambert to convert the stores and keep the jobs than closing the stores and firing the people.

If he closes the stores and immediately lease it to Walmart or Norstorm, he may feel better because he knows that these people can find jobs in this new store.

On the other hand, I think he is trying various things such as data center. If it works really well, he will likely do more of these conversions, but right now he is probably waiting to see how the experiment goes on first.

[Guest hellsten]

Stumbled on this article today which might be mildly interesting to SHLD and Rackspace investors.

 

Revitalizing a Dead Mall (Don’t Expect Shoppers):

http://www.nytimes.com/2012/10/31/realestate/commercial/rackspace-revitalizes-a-defunct-mall-into-an-unorthodox-tech-campus.html

 

The article links to this site:

http://deadmalls.com/

 

You can use this Google query to find the articles that mention Sears:

site:deadmalls.com sears

 

Then there's also this Wikipedia article:

http://en.wikipedia.org/wiki/List_of_defunct_store_chains_of_the_United_States

 

Which leads to e.g. Builder's Square:

http://en.wikipedia.org/wiki/Builders_Square

 

A subsidiary of Kmart, its format was quite similar to Home Depot, Menards and Lowe's with floor space of about 100,000 square feet (9,300 m2)."

…

"all remaining stores ceased business operations by the end of 1999.[4] The current Builders Square, Inc. operates builderssquare.com as a comparison shopping website for home and garden products

[Guest wellmont]

 

With that said, I expect the 2nd quarter to catch up the pent up demand of the first quarter due to cold weather, and also Sears is the only retailer offering lease to own, so this could impact the sales positively from this point on. I am not worried about Sears at all. I think he needs to close the Kmart stores soon.

 

what pent up demand? their sales were truly horrific last quarter.  And this with housing supposedly doing pretty well. In fact sales were so low that the company is not only Not making any net income on sales, they aren't even making any ebitda, which is the absolute lowest standard of corporate profitability. this is not about shifting sales from one quarter to another based on weather. it's about a failed retail company that is Losing in the marketplace to better competitors. they aren't even making ebitda (unless it xmas quarter).  There is absolutely no evidence any of these new retail concepts can work to make the retail business profitable.

[muscleman]

 

With that said, I expect the 2nd quarter to catch up the pent up demand of the first quarter due to cold weather, and also Sears is the only retailer offering lease to own, so this could impact the sales positively from this point on. I am not worried about Sears at all. I think he needs to close the Kmart stores soon.

 

what pent up demand? their sales were truly horrific last quarter.  And this with housing supposedly doing pretty well. In fact sales were so low that the company is not only Not making any net income on sales, they aren't even making any ebitda, which is the absolute lowest standard of corporate profitability. this is not about shifting sales from one quarter to another based on weather. it's about a failed retail company that is Losing in the marketplace to better competitors. they aren't even making ebitda (unless it xmas quarter).  There is absolutely no evidence any of these new retail concepts can work to make the retail business profitable.

 

What I am saying is that their appliances sales were affected by the cold weather, but if people buy less appliances in Q1, there is the pent up demand, so they will buy more in Q2.

[constructive]

What I am saying is that their appliances sales were affected by the cold weather, but if people buy less appliances in Q1, there is the pent up demand, so they will buy more in Q2.

 

Not if they're buying appliances other places besides Sears.

 

Look at the results at Home Depot, Lowe's, hhgregg, Whirlpool, Electrolux, GE, etc. What you perceive as pent up demand may be them taking profitable market share from Sears.

[stahleyp]

http://finance.yahoo.com/blogs/michael-santoli/most-hated-major-company-mall-172527823.html

 

 

fluff piece but some might find it interesting.

[muscleman]

What I am saying is that their appliances sales were affected by the cold weather, but if people buy less appliances in Q1, there is the pent up demand, so they will buy more in Q2.

 

Not if they're buying appliances other places besides Sears.

 

Look at the results at Home Depot, Lowe's, hhgregg, Whirlpool, Electrolux, GE, etc. What you perceive as pent up demand may be them taking profitable market share from Sears.

 

This is true. Home Depot's net income increase quite a bit in Q1, but I can't find a breakdown about appliances. It is hard to say what's going on. For Whirlpool, they did have less sales this Q than one year ago in North America, but I don't see they mention cold weather. GE's appliance revenue were flat.

SHOS's Q1 revenue was also negatively impacted by cold weather.

Bruce Johnson, chief executive officer and president stated, "Sales were below last year due to the impact of unseasonably cool weather in February and March. Same store sales of lawn and garden, our second largest category, were down 45% in the first two months."

 

I am wondering if they were right, or they were just trying to find an excuse? I guess this could also be true because Whirlpool makes a different produce mix compared with SHOS.

The company said it experienced lower sales of lawn and garden in Hometown due to colder weather conditions experienced in large portions of the U.S. delaying the start of the spring/summer season. Excluding lawn and garden, comparable store sales increased 1.4 percent, led by appliances and mattresses.

 

Read more: http://www.nasdaq.com/article/sears-hometown-q1-profit-declines---update-20130607-00248#ixzz2VlluMHki

[jeffmori7]

A question for those of you invested in Sears : are you in just via SHLD, or are ou also in SHOS or SCC?

 

I see SHOS as more a pure play on housing turnaround, being a retailer of the valuable brand that are Kensmore and crafstman, while SHLD is really a bet on how Lampert will generate value from the assets. Sears Canada is kind of more like SHLD, but with less store for sale and less upside?

[CorpRaider]

Unlike Buffet, Eddie seems to be a retail special investor, so he may find it even harder to give up, with past success in Gap, AutoZone, and now AutoNation. Buffet is different because he is never a textile expert. He succeeded in various investments before he came across the Berkshire trouble.

 

I don't know how to compare Buffett's textile to Lampert's retail.

 

Textile manufacturing simply left the country.  It didn't get beat by better US competition.

Retail has not left the country.  Sears and KMart are just getting whooped.  Walmart is doing just fine in the US.

 

yeah I always tend to try and compare lampert to buffett, but I think it is just my confirmation bias rearing it's ugly head and soothing me by saying "you spotted the next buffett".  Then I splash water on my face and remind myself, "buffett would never have called into an earnings call from his yacht."

[muscleman]

A question for those of you invested in Sears : are you in just via SHLD, or are ou also in SHOS or SCC?

 

I see SHOS as more a pure play on housing turnaround, being a retailer of the valuable brand that are Kensmore and crafstman, while SHLD is really a bet on how Lampert will generate value from the assets. Sears Canada is kind of more like SHLD, but with less store for sale and less upside?

 

I am in SHLD. SHOS is a pure play on appliances, yes. SHLD is more about properties. SCC is harder to figure out the upside because it has valuable lands that are undisclosed.

[BRK IN MKE]

Unlike Buffet, Eddie seems to be a retail special investor, so he may find it even harder to give up, with past success in Gap, AutoZone, and now AutoNation. Buffet is different because he is never a textile expert. He succeeded in various investments before he came across the Berkshire trouble.

 

I don't know how to compare Buffett's textile to Lampert's retail.

 

Textile manufacturing simply left the country.  It didn't get beat by better US competition.

Retail has not left the country.  Sears and KMart are just getting whooped.  Walmart is doing just fine in the US.

 

yeah I always tend to try and compare lampert to buffett, but I think it is just my confirmation bias rearing it's ugly head and soothing me by saying "you spotted the next buffett".  Then I splash water on my face and remind myself, "buffett would never have called into an earnings call from his yacht."

 

What is the story behind the earnings call from his yacht? I don't recall that ever happening.

[CorpRaider]

Sorry, not an earnings call. 

 

http://www.chicagobusiness.com/article/20120421/ISSUE01/304219970/sears-where-america-shopped

[Matson125]

Sears Metrotown development plans cause stir

http://www.burnabynewsleader.com/news/211039431.html

 

The recent NewsLeader story on Sears' Metrotown plans even caused a minor stir across the border among investment types.

After the story was posted on its website, the NewsLeader was contacted by three U.S. investment firms, two in New York and one in Los Angeles, seeking more information on the proposal.

 

I suspect the Los Angeles based firm that is quoted is Baker Street. Since they own so much of SHLD, but then again it's just speculation.  Since last Thursday the volume on Sears Canada has really ramped up.  On Thursday there was over 2.5 million shares traded and yesterday 1.8 million shares changed hands. ESL, Sears Holding and Fairholme hold 84 million out of 101 million shares.  I'll be interested to see if Fairholme is doing the selling.

 

[muscleman]

Sears Metrotown development plans cause stir

http://www.burnabynewsleader.com/news/211039431.html

 

The recent NewsLeader story on Sears' Metrotown plans even caused a minor stir across the border among investment types.

After the story was posted on its website, the NewsLeader was contacted by three U.S. investment firms, two in New York and one in Los Angeles, seeking more information on the proposal.

 

I suspect the Los Angeles based firm that is quoted is Baker Street. Since they own so much of SHLD, but then again it's just speculation.  Since last Thursday the volume on Sears Canada has really ramped up.  On Thursday there was over 2.5 million shares traded and yesterday 1.8 million shares changed hands. ESL, Sears Holding and Fairholme hold 84 million out of 101 million shares.  I'll be interested to see if Fairholme is doing the selling.

 

Likely. I still wonder why they bought a ton of call options...... If Eddie decides to spin off the valuable subs, SHLD will be worth much less than today's value, though shareholders will receive a lot of new stocks from the spin off, the call options will probably go sour.

[Guest wellmont]

Sears Metrotown development plans cause stir

http://www.burnabynewsleader.com/news/211039431.html

 

The recent NewsLeader story on Sears' Metrotown plans even caused a minor stir across the border among investment types.

After the story was posted on its website, the NewsLeader was contacted by three U.S. investment firms, two in New York and one in Los Angeles, seeking more information on the proposal.

 

I suspect the Los Angeles based firm that is quoted is Baker Street. Since they own so much of SHLD, but then again it's just speculation.  Since last Thursday the volume on Sears Canada has really ramped up.  On Thursday there was over 2.5 million shares traded and yesterday 1.8 million shares changed hands. ESL, Sears Holding and Fairholme hold 84 million out of 101 million shares.  I'll be interested to see if Fairholme is doing the selling.

 

Likely. I still wonder why they bought a ton of call options...... If Eddie decides to spin off the valuable subs, SHLD will be worth much less than today's value, though shareholders will receive a lot of new stocks from the spin off, the call options will probably go sour.

 

that would give the call seller a free lunch. and there aren't many of those in today's capital markets.

 

What are Adjusted Options

These non-standardized options with weird, tempting pricing are adjusted options and is excluded from options chains provided by online options trading brokers by default.

 

Adjusted options are created as a result of significant corporate activities such as mergers, acquisitions, spin-offs, stock splits, reverse splits or special dividends. In short, adjusted options are created as a result of changes in capital structure of a company that affects the capitalization or share value of its shares.

Whenever such significant changes happen to a stock, its stock options also need to be adjusted accordingly in order to reflect the new capital arrangement. Such an adjustment creates adjusted options with prices that cannot be determined by the conventional extrinsic / intrinsic value calculation.

[muscleman]

Sears Metrotown development plans cause stir

http://www.burnabynewsleader.com/news/211039431.html

 

The recent NewsLeader story on Sears' Metrotown plans even caused a minor stir across the border among investment types.

After the story was posted on its website, the NewsLeader was contacted by three U.S. investment firms, two in New York and one in Los Angeles, seeking more information on the proposal.

 

I suspect the Los Angeles based firm that is quoted is Baker Street. Since they own so much of SHLD, but then again it's just speculation.  Since last Thursday the volume on Sears Canada has really ramped up.  On Thursday there was over 2.5 million shares traded and yesterday 1.8 million shares changed hands. ESL, Sears Holding and Fairholme hold 84 million out of 101 million shares.  I'll be interested to see if Fairholme is doing the selling.

 

Likely. I still wonder why they bought a ton of call options...... If Eddie decides to spin off the valuable subs, SHLD will be worth much less than today's value, though shareholders will receive a lot of new stocks from the spin off, the call options will probably go sour.

 

that would give the call seller a free lunch. and there aren't many of those in today's capital markets.

 

What are Adjusted Options

These non-standardized options with weird, tempting pricing are adjusted options and is excluded from options chains provided by online options trading brokers by default.

 

Adjusted options are created as a result of significant corporate activities such as mergers, acquisitions, spin-offs, stock splits, reverse splits or special dividends. In short, adjusted options are created as a result of changes in capital structure of a company that affects the capitalization or share value of its shares.

Whenever such significant changes happen to a stock, its stock options also need to be adjusted accordingly in order to reflect the new capital arrangement. Such an adjustment creates adjusted options with prices that cannot be determined by the conventional extrinsic / intrinsic value calculation.

 

Oh..... Thank you for pointing this out. :)

[BargainValueHunter]

http://articles.washingtonpost.com/2013-06-02/business/39698263_1_howard-hughes-corp-landmark-mall-redevelopment-plan

 

Howard Hughes proposed adding apartments, pedestrian connections and public transit options for 1.2 acres in the center of the mall’s 51.5-acre site. In April, John Simon, Howard Hughes executive vice president, presented the company’s plans and told residents the project would create a “sort of small town, urban environment,” but that the plans were contingent on approval from Sears and Macy’s, which each own their stores and plan to remain open.

 

http://assets.bizjournals.com/washington/breaking_ground/Landmark%20Mall%20-%20bridge%20render.jpg?v=1

 

http://www.bizjournals.com/washington/breaking_ground/2012/12/landmark-mall-redevelopment-plans.html?page=all

 

Howard Hughes (NYSE: HHC) took control of the mall as part of the company’s split from General Growth Properties Inc. (NYSE: GGP) But the company only owns a third of the physical mall property itself and does not own the Macy’s or Sears stores there now. Any redevelopment would have to be done with their consent, or at least their feedback.

[muscleman]

http://articles.washingtonpost.com/2013-06-02/business/39698263_1_howard-hughes-corp-landmark-mall-redevelopment-plan

 

Howard Hughes proposed adding apartments, pedestrian connections and public transit options for 1.2 acres in the center of the mall’s 51.5-acre site. In April, John Simon, Howard Hughes executive vice president, presented the company’s plans and told residents the project would create a “sort of small town, urban environment,” but that the plans were contingent on approval from Sears and Macy’s, which each own their stores and plan to remain open.

 

http://assets.bizjournals.com/washington/breaking_ground/Landmark%20Mall%20-%20bridge%20render.jpg?v=1

 

http://www.bizjournals.com/washington/breaking_ground/2012/12/landmark-mall-redevelopment-plans.html?page=all

 

Howard Hughes (NYSE: HHC) took control of the mall as part of the company’s split from General Growth Properties Inc. (NYSE: GGP) But the company only owns a third of the physical mall property itself and does not own the Macy’s or Sears stores there now. Any redevelopment would have to be done with their consent, or at least their feedback.

 

Nice! ;D

[BargainValueHunter]

Sears to sell back two Toronto leases for $191 million.

 

 

[ourkid8]

Remember, this is Sears Canada.  (Shld has a 51% ownership in it)

 

In addition to the agreement on the two stores, Sears has also agreed to sell an option relating to a third store located at Scarborough Town Centre to the Co-Owners for financial consideration of $1 million , also to be paid by June 24, 2013 . The Co-Owners have five years to exercise the option on this property at a fixed total cost of $53 million .

 

Tks,

S

Sears to sell back two Toronto leases for $191 million.

[LC]

The more I own Sears, the more I think it's a play on recovering home values across the country. I think EL is holding on until then so he can realize full value for the assets he has.

[value-is-what-you-get]

Sears to sell back two Toronto leases for $191 million.

 

If it's helpful in valuing Sears real estate assets, these stores are at the three biggest retail mall locations in Toronto.  This is the high end of the valuation.  Without knowing the specifics of the lease terms, it's not possible to compute value.  Nordstrom's will be moving in to two of them.

 

It is interesting to note the incentives here too.  The mall owners would prefer a shiny new Nordstroms to a tired (in the consumers mind) Sears in the same location. 

 

Initially this all sounds good for SHLD but when a retailer is selling off prime retail locations, Munger's words ring in my ears ". . . and then what".

[muscleman]

Sears to sell back two Toronto leases for $191 million.

 

If it's helpful in valuing Sears real estate assets, these stores are at the three biggest retail mall locations in Toronto.  This is the high end of the valuation.  Without knowing the specifics of the lease terms, it's not possible to compute value.  Nordstrom's will be moving in to two of them.

 

It is interesting to note the incentives here too.  The mall owners would prefer a shiny new Nordstroms to a tired (in the consumers mind) Sears in the same location. 

 

Initially this all sounds good for SHLD but when a retailer is selling off prime retail locations, Munger's words ring in my ears ". . . and then what".

 

Yes this sounds a little disturbing to me at first, but after a second thought, this is actually not a bad thing. The department store business will continue to decline in the near future, and Amazon will put on pressure for all retailers, so the sooner the exit, the better, especially if they can get a sweat deal.

Regarding the other properties outside of key locations, data center is not a bad idea if the infrastructure for power and cable exists. :)