SHLDQ - Sears Holdings Corp

[Vish_ram]

It's sadly to 671 pages. When I joined it was at 521. If an investment thesis requires any more than 10 minutes to discuss, it's probably not a fat pitch.

 

Take your SOTP of Sears. Forecast out a timeline for liquidation. Slash the valuations by half for conservatism. And if you make enough to compensate you for taking on this risk, then it's a buy.

 

What more is there?

 

People come to this thread not for investment analysis. It is morbid curiosity. This is a reality show between bulls and bears (in paper only. I wonder if we got any real shorts). Bears & onlookers want to know the underlying psychology of bulls, to get a first hand glimpse of how bulls are deluding themselves. The bulls on the other hand, scour the world for a shred of news and get a gleam of hope.

 

Sears is the Kardashians of stocks.

 

[txlaw]

It's sadly to 671 pages. When I joined it was at 521. If an investment thesis requires any more than 10 minutes to discuss, it's probably not a fat pitch.

 

Take your SOTP of Sears. Forecast out a timeline for liquidation. Slash the valuations by half for conservatism. And if you make enough to compensate you for taking on this risk, then it's a buy.

 

What more is there?

 

People come to this thread not for investment analysis. It is morbid curiosity. This is a reality show between bulls and bears (in paper only. I wonder if we got any real shorts). Bears & onlookers want to know the underlying psychology of bulls, to get a first hand glimpse of how bulls are deluding themselves. The bulls on the other hand, scour the world for a shred of news and get a gleam of hope.

 

Sears is the Kardashians of stocks.

 

There is no doubt that SHLD is one of the most entertaining and fascinating topics of discussion in the value investing community.

 

But there is an unwarranted logical leap you're making. 

 

Simply because certain folks who are long the equity make arguments that don't stand up upon scrutiny does not mean that members of the so-called "bull" camp have not engaged in any sort of rational SOTP analysis.  I can guarantee you, for example, that Bruce B is not relying on guarantor/non-guarantor analysis with respect to SHLD common, and that he has done a lot of homework on the value of the RE, KCD, etc. 

 

Similarly, simply because some in the "bear" camp make outlandish claims about imminent BK and ESL "stealing properties" does not mean that shorts or "too hard pile" investors have simply caved in to market sentiment.  I can guarantee you that Pabrai thought about SHLD long and hard and determined that ESL's actions and the potential opportunity cost of keeping money in SHLD was simply not worth the risk.

 

Perhaps we should just "Let it Be", as Paul McCartney said?

[Mephistopheles]

http://www.sec.gov/Archives/edgar/data/1214344/000091957414005354/xslF345X02/p6103221.xml

 

berkowitz personally buying?

 

He's owned personally for quite some time now, I think he last added earlier this year.

[hardincap]

This is a form 3. Per SEC: The initial filing is on Form 3. An insider of an issuer that is registering equity securities for the first time under Section 12 of the Exchange Act must file this Form no later than the effective date of the registration statement. If the issuer is already registered under Section 12, the insider must file a Form 3 within ten days of becoming an officer, director, or beneficial owner.

 

 

http://www.sec.gov/Archives/edgar/data/1214344/000091957414005354/xslF345X02/p6103221.xml

 

berkowitz personally buying?

 

He's owned personally for quite some time now, I think he last added earlier this year.

[rijk]

ok, so since this is the first and only form 3 filing by bb on shld, does this indicated that bb personally purchased all 913k shares of shld no more than 10 days prior to sep 24?

 

regards

rijk

[merkhet]

No. He has had a significant personal investment in Sears for a while. It just means he didn't have to file a Form 3 until now.

[Eye4Valu]

It's funny how wrong Bruce looks until he's proved right. For example, he's down 20B AUM to 8B by being early (looking wrong) in AIG, BAC. Now look at them. People doubted those names just as much if not more than they doubt the SHLD long thesis.  I strongly suspect SHLD, FNMA and FMCC will be no different than AIG and BAC over time. People thought for sure BAC was going bust. It traded down to $5! The sky is falling SHLD bears, just like it was with AIG and BAC, right? Be sure to keep over analyzing every move by ESL and BB on a daily basis. You all deserve to be anchors on CNBC!

[Mephistopheles]

It's funny how wrong Bruce looks until he's proved right. For example, he's down 20B AUM to 8B by being early (looking wrong) in AIG, BAC. Now look at them. People doubted those names just as much if not more than they doubt the SHLD long thesis.  I strongly suspect SHLD, FNMA and FMCC will be no different than AIG and BAC over time. People thought for sure BAC was going bust. It traded down to $5! The sky is falling SHLD bears, just like it was with AIG and BAC, right? Be sure to keep over analyzing every move by ESL and BB on a daily basis. You all deserve to be anchors on CNBC!

 

For BB to right on SHLD, not only does he have to make a profit, but he has to make a large enough profit to justify the opportunity cost of holding the shares for like 8 years (or however long he's held them) and counting. Each year that they don't perform makes this less and less likely, IMO.

[hardincap]

He previously reported 783k shares. Form 3 states 916k

 

ok, so since this is the first and only form 3 filing by bb on shld, does this indicated that bb personally purchased all 913k shares of shld no more than 10 days prior to sep 24?

 

regards

rijk

[merkhet]

It reports the same amount as the 13D filing on the 18th (?) -- so the increase came pre-ESL loan.

[hardincap]

Anyone know offhand what Lampert's return on sears canada is from his 2010 purchase from ackman? he purchased it for 30cad/sh. we dont know what the final price will be but its currently trading at $11cad, a return of -66% excluding dividends paid out.

 

edit: looks like they distributed $11/sh? still a very poor investment over 4 years

 

It's funny how wrong Bruce looks until he's proved right. For example, he's down 20B AUM to 8B by being early (looking wrong) in AIG, BAC. Now look at them. People doubted those names just as much if not more than they doubt the SHLD long thesis.  I strongly suspect SHLD, FNMA and FMCC will be no different than AIG and BAC over time. People thought for sure BAC was going bust. It traded down to $5! The sky is falling SHLD bears, just like it was with AIG and BAC, right? Be sure to keep over analyzing every move by ESL and BB on a daily basis. You all deserve to be anchors on CNBC!

 

For BB to right on SHLD, not only does he have to make a profit, but he has to make a large enough profit to justify the opportunity cost of holding the shares for like 8 years (or however long he's held them) and counting. Each year that they don't perform makes this less and less likely, IMO.

[hardincap]

It reports the same amount as the 13D filing on the 18th (?) -- so the increase came pre-ESL loan.

 

thanks, missed that

[Mephistopheles]

I know I asked this yesterday, but I want to bring it up again because I haven't seen it mentioned much in this thread.

 

Is it possible for Eddie to lose majority control in the not so distant future? If ESL investors keep redeeming he's going to have to start selling his SHLD stake. And he only personally owns ~25%. Meanwhile Berkowitz continues to buy more shares.

 

I feel if the condition continues to deteriorate, ESL will continue to face significant redemptions.

[ourkid8]

I think its pretty funny how someone can compare BAC/AIG to SHLD.  BAC/AIG are systemically important organization to the global economy which had short term issues(which have been addressed) but overall EXTREMELY profitable whereas SHLD has serious structural issues where the franchise continues to degrade and it is burning through cash with no end in sight.

 

I do not feel like going into a lengthy discussion about comparing the two organizations but I hope you understand comparing the two is rather foolish.

 

Tks,

S

 

It's funny how wrong Bruce looks until he's proved right. For example, he's down 20B AUM to 8B by being early (looking wrong) in AIG, BAC. Now look at them. People doubted those names just as much if not more than they doubt the SHLD long thesis.  I strongly suspect SHLD, FNMA and FMCC will be no different than AIG and BAC over time. People thought for sure BAC was going bust. It traded down to $5! The sky is falling SHLD bears, just like it was with AIG and BAC, right? Be sure to keep over analyzing every move by ESL and BB on a daily basis. You all deserve to be anchors on CNBC!

[Luke 532]

I know I asked this yesterday, but I want to bring it up again because I haven't seen it mentioned much in this thread.

 

Is it possible for Eddie to lose majority control in the not so distant future? If ESL investors keep redeeming he's going to have to start selling his SHLD stake. And he only personally owns ~25%. Meanwhile Berkowitz continues to buy more shares.

 

I feel if the condition continues to deteriorate, ESL will continue to face significant redemptions.

 

It's always possible, but I would imagine at $25 a share that he'd likely buy the shares personally from his partners.  This is his baby and his entire reputation is hanging in the balance, so it's probably fair to say that he'll do everything in his power to remain the majority holder. 

 

He added significantly 2.5 years ago when the stock was around the same spin-off adjusted price (and the stock tripled in 9 weeks). Here's just one of the filings:

http://www.sec.gov/Archives/edgar/data/860585/000120919112003365/xslF345X03/doc4.xml

"8. This price represents the price per Share of private purchases from Investors."

[Luke 532]

Short interest update for those interested...

Short (as of 9/15/2014): 15.384M

Lampert/Berkowitz/Tisch: 81.208M

Lampert/Berkowitz/Tisch/Stahl: 87.037M

Outstanding: 106.451M

Float (excluding Stahl): 25.243M

Float (including Stahl): 19.414M

 

Short interest as % of float: 60.9% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, and Tisch).

Short interest as % of float: 79.2% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, Tisch, and Stahl).

 

Murray Stahl’s conviction is increasing (increased position 65% in past 3 quarters) so it’s probably safe to say he’s a true long-term holder, although one never knows for sure. August 5, 2014: “I have no doubt that Sears will realize its value.”*

 

Doesn’t include Chou who has a history of being firm in his convictions and not selling easily (803,000 shares… increased position 17% Q3 2013), nor does it include Fine (increased her position 85% the past 3 quarters and now holds 2.656M shares), nor anybody else.

 

* http://online.barrons.com/news/articles/SB50001424053111903849404580065802822593866?mod=BOL_hp_popview

 

 

[ScottHall]

Short interest update for those interested...

Short (as of 9/15/2014): 15.384M

Lampert/Berkowitz/Tisch: 81.208M

Lampert/Berkowitz/Tisch/Stahl: 87.037M

Outstanding: 106.451M

Float (excluding Stahl): 25.243M

Float (including Stahl): 19.414M

 

Short interest as % of float: 60.9% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, and Tisch).

Short interest as % of float: 79.2% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, Tisch, and Stahl).

 

Murray Stahl’s conviction is increasing (increased position 65% in past 3 quarters) so it’s probably safe to say he’s a true long-term holder, although one never knows for sure. August 5, 2014: “I have no doubt that Sears will realize its value.”*

 

Doesn’t include Chou who has a history of being firm in his convictions and not selling easily (803,000 shares… increased position 17% Q3 2013), nor does it include Fine (increased her position 85% the past 3 quarters and now holds 2.656M shares), nor anybody else.

 

* http://online.barrons.com/news/articles/SB50001424053111903849404580065802822593866?mod=BOL_hp_popview

 

What if you include yourself and all the other investors on the board? You have to figure there's at least another million shares in thick hands from this site alone, and I'm not sure your analysis is complete without counting them.

[ScottHall]

I mean, if you're going to do it right.

 

But more generally, don't you think this sort of analysis leads itself to false specificity? Does it matter so much if the short percentage is 60% or 70%, so long as you have a rough idea?

 

It reminds me of something Bob Fifer said in a book once, which is that you really should not spend time on exact calculations if the difference between the two numbers will make no difference to your ultimate action. If you'd do the same thing anyway, you'd just be wasting time.

 

Just my two cents...

[Luke 532]

I mean, if you're going to do it right.

 

But more generally, don't you think this sort of analysis leads itself to false specificity? Does it matter so much if the short percentage is 60% or 70%, so long as you have a rough idea?

 

It reminds me of something Bob Fifer said in a book once, which is that you really should not spend time on exact calculations if the difference between the two numbers will make no difference to your ultimate action. If you'd do the same thing anyway, you'd just be wasting time.

 

Just my two cents...

 

I'm not sure how you come to the conclusion that an analysis of just 3-4 investors is exact.  It's meant to be conservative, not exact.  It's as conservative as one can get.

[Picasso]

I don't see how the short interest plays a part in anyones thesis.  It only highlights how weak the bull thesis is when you need to sell the shares into short squeeze to turn a profit.

 

Wouldn't that fly in the face of value investing?  If you say you cannot time the turnaround so you want to buy the shares NOW, then what makes you think you will sell the shares at a price that allows you to buy back in and still hold SHLD for the long-term to realize those 10 bagger gains?  A short squeeze should have no bearing on the investment results.

 

Even Volkswagen went back and below the price at the start of the squeeze in 2008.

 

Edit:  It reminds me when I would look at stocktwits and see a bunch of retail investors go "squueeeeze, shorts getting squueeeezed."  I would immediately think the bull case is lacking substance. 

[Luke 532]

I don't see how the short interest plays a part in anyones thesis.  It only highlights how weak the bull thesis is when you need to sell the shares into short squeeze to turn a profit.

 

Wouldn't that fly in the face of value investing?  If you say you cannot time the turnaround so you want to buy the shares NOW, then what makes you think you will sell the shares at a price that allows you to buy back in and still hold SHLD for the long-term to realize those 10 bagger gains?  A short squeeze should have no bearing on the investment results.

 

Even Volkswagen went back and below the price at the start of the squeeze in 2008.

 

Edit:  It reminds me when I would look at stocktwits and see a bunch of retail investors go "squueeeeze, shorts getting squueeeezed."  I would immediately think the bull case is lacking substance.

 

When did I ever say short interest has any weight on the nuts and bolts of a value investment thesis?  Do we really need to hash this out again (it's been discussed ad nauseam that it's not part of any thesis if you take the time to read the thread)?  It's laborious.  I posted some short interest data "for those interested" - if you're not interested then simply don't post.

[Picasso]

I don't see how the short interest plays a part in anyones thesis.  It only highlights how weak the bull thesis is when you need to sell the shares into short squeeze to turn a profit.

 

Wouldn't that fly in the face of value investing?  If you say you cannot time the turnaround so you want to buy the shares NOW, then what makes you think you will sell the shares at a price that allows you to buy back in and still hold SHLD for the long-term to realize those 10 bagger gains?  A short squeeze should have no bearing on the investment results.

 

Even Volkswagen went back and below the price at the start of the squeeze in 2008.

 

Edit:  It reminds me when I would look at stocktwits and see a bunch of retail investors go "squueeeeze, shorts getting squueeeezed."  I would immediately think the bull case is lacking substance.

 

When did I ever say short interest has any weight on the nuts and bolts of a value investment thesis?  Do we really need to hash this out again (it's been discussed ad nauseam that it's not part of any thesis if you take the time to read the thread)?  It's laborious.  I posted some short interest data "for those interested" - if you're not interested then simply don't post.

 

So who here has an interest in the short interest versus float?  I would love to hear why that is of any importance on a value investing board.

[Luke 532]

So who here has an interest in the short interest versus float?  I would love to hear why that is of any importance on a value investing board.

 

Again, if you bothered to read the thread you wouldn't need to ask this question.  Read through the thread and you'll find a discussion on this very topic, with varying viewpoints.

 

Who's interested?  He's not interested any longer but at one point the creator of this very website had the following to say:

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/shld-sears/msg131520/#msg131520

(excerpt) "Combined with the doubling of the short position in the last four months, I figured now was a pretty good time to buy some SHLD or LEAPs.  Cheers!" 

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/shld-sears/msg132084/#msg132084

"It has been so far.  Numbers wise, it is one of the biggest squeezes you will see based on shares short and actual available float.  It's the main reason we jumped in with the LEAPs.  This movement has been happening with no news other than an analyst report.  Can you imagine what will happen if Sears actually makes some progress in a quarter?  It's even much tighter than the Overstock squeeze, so any good news and this thing could prove to be a nightmare for the shorts.  Cheers!"

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/shld-sears/msg132100/#msg132100

"I think short interest definitely matters if you are on the opposite side of the analysis.  I've made considerable sums betting against shorts on several occasions, and that was because I felt their analysis was partly incorrect.  Not completely incorrect, but often shorts are correct on one aspect of a troubled business, and like optimistic longs, they tend to negate the other side of the argument.  But if you are long, it will never kill you and you'll go to zero if you are wrong.  If you are short, it won't just kill you, but the squeeze will run right past zero and take everything you have except your life...and most wish it would take their life too!  So in my opinion, short interest definitely matters in certain situations when the analysis may not be fully accurate.  Think FFH, BH, BAC, OSTK and now SHLD.  Cheers!"

 

[BargainValueHunter]

I don't see how the short interest plays a part in anyones thesis.  It only highlights how weak the bull thesis is when you need to sell the shares into short squeeze to turn a profit.

 

Wouldn't that fly in the face of value investing?  If you say you cannot time the turnaround so you want to buy the shares NOW, then what makes you think you will sell the shares at a price that allows you to buy back in and still hold SHLD for the long-term to realize those 10 bagger gains?  A short squeeze should have no bearing on the investment results.

 

Even Volkswagen went back and below the price at the start of the squeeze in 2008.

 

Edit:  It reminds me when I would look at stocktwits and see a bunch of retail investors go "squueeeeze, shorts getting squueeeezed."  I would immediately think the bull case is lacking substance. 

+1

 

[Luke 532]

Short interest update for those interested...

Short (as of 9/15/2014): 15.384M

Lampert/Berkowitz/Tisch: 81.208M

Lampert/Berkowitz/Tisch/Stahl: 87.037M

Outstanding: 106.451M

Float (excluding Stahl): 25.243M

Float (including Stahl): 19.414M

 

Short interest as % of float: 60.9% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, and Tisch).

Short interest as % of float: 79.2% (assuming zero shares are long-term oriented other than Lampert, Berkowitz, Tisch, and Stahl).

 

Murray Stahl’s conviction is increasing (increased position 65% in past 3 quarters) so it’s probably safe to say he’s a true long-term holder, although one never knows for sure. August 5, 2014: “I have no doubt that Sears will realize its value.”*

 

Doesn’t include Chou who has a history of being firm in his convictions and not selling easily (803,000 shares… increased position 17% Q3 2013), nor does it include Fine (increased her position 85% the past 3 quarters and now holds 2.656M shares), nor anybody else.

 

* http://online.barrons.com/news/articles/SB50001424053111903849404580065802822593866?mod=BOL_hp_popview

 

Note: data is as of 9/15/2014... prior to the ~$9 drop in the stock over the past 2 weeks.  One might reason that the short interest has climbed.  One might also suspect that Stahl, Fine and others have added in this time period.  Potentially higher short interest coupled with lower float.