Luke 532 Posted October 21, 2014 Share Posted October 21, 2014 As Sears shrinks, it takes on a new role: Landlord http://fortune.com/2014/10/20/sears-primark/ Link to comment Share on other sites More sharing options...
wisdom Posted October 21, 2014 Share Posted October 21, 2014 http://www.forbes.com/sites/walterloeb/2014/10/21/why-sears-undermines-its-own-positioning-by-leasing-to-primark/?partner=yahootix Link to comment Share on other sites More sharing options...
tng Posted October 21, 2014 Share Posted October 21, 2014 I sold off my small SHLD stake today given how much it ran up yesterday. I am typically not a trader, but SHLD still has a long way to go before they stop losing money, and the shorts are likely to pile on again after the rights offerings are done. I'll wait until the warrants trade before I get back in because SHLD is a bit too hard for me to tie up so much capital, would rather have a defined maximum loss. Also, giving the likely binary outcome (either SHLD burns cash forever, or they turn around the operations and monetize real estate), the warrants may be the better bet. There is often a liquidity discount too. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 21, 2014 Share Posted October 21, 2014 http://www.forbes.com/sites/walterloeb/2014/10/21/why-sears-undermines-its-own-positioning-by-leasing-to-primark/?partner=yahootix Valid concerns but have thus far been unsupported in prior stores where this has been done. Prior Sears locations that have done this have greatly improved sales while significantly reducing costs. That may not end up being the case here but should be the base case until proven incorrect. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 21, 2014 Share Posted October 21, 2014 I sold off my small SHLD stake today given how much it ran up yesterday. I am typically not a trader, but SHLD still has a long way to go before they stop losing money, and the shorts are likely to pile on again after the rights offerings are done. I'll wait until the warrants trade before I get back in because SHLD is a bit too hard for me to tie up so much capital, would rather have a defined maximum loss. Also, giving the likely binary outcome (either SHLD burns cash forever, or they turn around the operations and monetize real estate), the warrants may be the better bet. There is often a liquidity discount too. I was fortunate to get out near the highs yesterday at ariund a 10% gain. I don't like the monetization of shareholders occurring though it is nice to see Eddie "doubling" down on the equity. I continue to view this as a trading opportunity as monetizing real estate is clearly not happening very quickly in the short term. My only concern is a deal announced overnight that causes this to double but I dont think we're there yet and recent events seem to support that. Link to comment Share on other sites More sharing options...
wisdom Posted October 21, 2014 Share Posted October 21, 2014 My question is: where did he find the information regarding additional stores being leased by Primark and Aldi on the list. thanks. Link to comment Share on other sites More sharing options...
oddballstocks Posted October 21, 2014 Share Posted October 21, 2014 My question is: where did he find the information regarding additional stores being leased by Primark and Aldi on the list. thanks. Probably the tried and true route for a reporter -> picked up the phone and called commercial brokers in the markets. Link to comment Share on other sites More sharing options...
DCG Posted October 21, 2014 Share Posted October 21, 2014 I don't follow Sears incredibly closely, but is this take on yesterday's run up accurate? Company is bleeding cash so quickly that the CEO needs to use his own money to keep the company in bueinss = good news? I must be missing something here. Link to comment Share on other sites More sharing options...
Kraven Posted October 21, 2014 Share Posted October 21, 2014 I just had a brilliant idea. With all that empty space Sears has they should start renting it out for things like weddings and Bar Mitzvahs. Hell, they could even do school graduations if say there was a weather event. They wouldn't even need to close the store. They could just partition an area off. The space in some of these stores is cavernous. Guests of the event wouldn't even know there is anyone else in the store and the shopper(s) might enjoy the music like the wedding march or the Hava Nagila. The store could even work something out like if there were extra hors d'ouevres they could be passed out to the shopper(s). Link to comment Share on other sites More sharing options...
gg Posted October 21, 2014 Share Posted October 21, 2014 Have any of the longs on this board been lending out their shares recently? Just heard from someone that it's real difficult to find shares to short, so the rebates are apparently very high. Curious if anyone here would share what they're making for lending out their shares to shorts. Thanks! Link to comment Share on other sites More sharing options...
compoundinglife Posted October 21, 2014 Share Posted October 21, 2014 Have any of the longs on this board been lending out their shares recently? Just heard from someone that it's real difficult to find shares to short, so the rebates are apparently very high. Curious if anyone here would share what they're making for lending out their shares to shorts. Thanks! I have been lending when its offered to me. Unfortunately most of the shares are at Schwab and not IB. Schwab is is only giving me 6% at the moment, actually getting more on my SD shares (10%). Have considered moving all my SHLD to over to IB to take advantage of their lending program which I suspect would get me a higher rate than what I get at schwab. Link to comment Share on other sites More sharing options...
heth247 Posted October 21, 2014 Share Posted October 21, 2014 I just had a brilliant idea. With all that empty space Sears has they should start renting it out for things like weddings and Bar Mitzvahs. Hell, they could even do school graduations if say there was a weather event. They wouldn't even need to close the store. They could just partition an area off. The space in some of these stores is cavernous. Guests of the event wouldn't even know there is anyone else in the store and the shopper(s) might enjoy the music like the wedding march or the Hava Nagila. The store could even work something out like if there were extra hors d'ouevres they could be passed out to the shopper(s). I am not sure how many people want to do weddings there. But it seems that there is no lack of creativity at Sears regarding renting out space. Didn't one of their stores partition to have a DMV inside? ;) Link to comment Share on other sites More sharing options...
ERICOPOLY Posted October 21, 2014 Share Posted October 21, 2014 I'm more partial to the idea of Sears locations redeveloped as ebola quarantine centers. Where else can you ensure that risk of person-to-person contact is this low? Link to comment Share on other sites More sharing options...
Kraven Posted October 21, 2014 Share Posted October 21, 2014 I'm more partial to the idea of Sears locations redeveloped as ebola quarantine centers. Where else can you ensure that risk of person-to-person contact is this low? Sears: The Ellis Island of the 21st Century Link to comment Share on other sites More sharing options...
txlaw Posted October 21, 2014 Share Posted October 21, 2014 Although I doubt most existing shareholders were expecting SHLD to be raising funds from themselves, the recent rights offering does alleviate concerns that ESL is trying to steal the company or RE from minority shareholders. The saga continues. Link to comment Share on other sites More sharing options...
ap1234 Posted October 21, 2014 Share Posted October 21, 2014 I apologize in advance for interrupting the informative discussion on fake mustaches and swastika rings. If people on the board don’t mind, I’d like to ask a couple questions about the business (unless this is the wrong forum for these kinds of discussions). To Luke 5:32 (and other SHLD shareholders): 1. Will you be exercising your Sears Canada rights? 2. Have you done any analysis on the real estate value of Sears Canada? 3. Do you come up with any realistic scenarios where the NAV of Sears Canada is worth less than $10/share? It is clear what Eddie and Bruce think about the value of Sears Canada’s assets (and they have more information than any outside shareholder). However, rather than simply coat tailing, I’d be interested to know if anyone else has done any work on the asset value? Analyzing the US real estate for SHLD seems a lot simpler given that they have retained a presence in many of the best malls in America. In contrast, Sears Canada has already sold off some of their best real estate (ex. Eaton Centre). As such, it’s harder to value the remaining real estate portfolio of Sears Canada with as much accuracy. Any thoughts on the value of Sears Canada would be much appreciated!! I look forward to reading another 100 pages about the arrogance of a hedge fund manager who tries to run a retailer and why SHLD is on the verge of bankruptcy… Link to comment Share on other sites More sharing options...
wisdom Posted October 21, 2014 Share Posted October 21, 2014 1 example of value: Burnaby store = http://www.vancitybuzz.com/2013/06/1-billion-redevelopment-proposed-for-metrotown/ http://www.vancouversun.com/business/Sears+applies+build+seven+towers+Metrotown+site/8490662/story.html http://www.burnabynewsleader.com/news/209521191.html From what I recall this one store would lead to a $1B development and SCC would get 50% ownership while the developers would spend their capital. Please correct me if I am wrong. This is when market cap of SCC is just over $1 B. So this project alone could be 50% of market cap if SCC's share is valued at $500 mil. EDIT: needless to say that most people think SCC only had a few stores in Canada with any value. Link to comment Share on other sites More sharing options...
wisdom Posted October 21, 2014 Share Posted October 21, 2014 additional details about that project: http://www.vancouvermarket.ca/2013/10/15/sears-names-concord-pacific-as-developer-for-metrotown-property/ Concord is a very successful developer. Link to comment Share on other sites More sharing options...
peridotcapital Posted October 21, 2014 Share Posted October 21, 2014 I apologize in advance for interrupting the informative discussion on fake mustaches and swastika rings. If people on the board don’t mind, I’d like to ask a couple questions about the business (unless this is the wrong forum for these kinds of discussions). To Luke 5:32 (and other SHLD shareholders): 1. Will you be exercising your Sears Canada rights? 2. Have you done any analysis on the real estate value of Sears Canada? 3. Do you come up with any realistic scenarios where the NAV of Sears Canada is worth less than $10/share? It is clear what Eddie and Bruce think about the value of Sears Canada’s assets (and they have more information than any outside shareholder). However, rather than simply coat tailing, I’d be interested to know if anyone else has done any work on the asset value? Analyzing the US real estate for SHLD seems a lot simpler given that they have retained a presence in many of the best malls in America. In contrast, Sears Canada has already sold off some of their best real estate (ex. Eaton Centre). As such, it’s harder to value the remaining real estate portfolio of Sears Canada with as much accuracy. Any thoughts on the value of Sears Canada would be much appreciated!! I look forward to reading another 100 pages about the arrogance of a hedge fund manager who tries to run a retailer and why SHLD is on the verge of bankruptcy… While I am long neither Sears Canada (I sold at $15 earlier this year, when it reached my price target -- $20 before the $5 2013 special dividend) nor Sears Holdings common (long debt only), I will offer up a few points: 1) In contrast to SHLD, SCC owns very few of their stores (less than 20). They have cashed out their most valuable stores/leases (the urban locations) for good reason; that is where the value was and they are taking the operational focus to the suburbs. 2) The land and buildings are on the books for about $600 million (not a small number given the breakdown of leases to owned stores). Is there significant upside to that number in terms of actual market value? Unlikely given their current store footprint, given the work I have done (though Burnaby alone is a nice sized chunk of that). As another reference point, it was interesting that potential bidders in the auction submitted round one bids to get a deep look at SCC's books and there were no round two bids from anyone after they carefully examined everything. In my view, if the real estate value was there as a margin of safety, somebody would not have cared that the retail operations were losing money (free cash flow negative ever since 2012, breakeven in 2011). 3) Tangible book is about $9.50 and if you adjust for a few of the best properties you can get to $12-$15 pretty easily, but you have the same problem as with SHLD (the cash burn). Cumulative FCF for the last 2 1/2 years was negative $5 per share. So you can see how quickly $15 of value can erode unless they reach FCF breakeven soon (and maintain it) to preserve that value. Link to comment Share on other sites More sharing options...
peridotcapital Posted October 21, 2014 Share Posted October 21, 2014 1 example of value: Burnaby store = http://www.vancitybuzz.com/2013/06/1-billion-redevelopment-proposed-for-metrotown/ http://www.vancouversun.com/business/Sears+applies+build+seven+towers+Metrotown+site/8490662/story.html http://www.burnabynewsleader.com/news/209521191.html From what I recall this one store would lead to a $1B development and SCC would get 50% ownership while the developers would spend their capital. Please correct me if I am wrong. This is when market cap of SCC is just over $1 B. So this project alone could be 50% of market cap if SCC's share is valued at $500 mil. EDIT: needless to say that most people think SCC only had a few stores in Canada with any value. The Burnaby JV valued the project at $280M (Sears sold a 50% stake for $140M). The $1B figure is the total investment, but Sears is unlikely to fund their full share of that (they made sure the deal said they did not have to), so their ownership would likely drop over time as capital was raised to build out the development. Link to comment Share on other sites More sharing options...
adesigar Posted October 21, 2014 Share Posted October 21, 2014 I apologize in advance for interrupting the informative discussion on fake mustaches and swastika rings. If people on the board don’t mind, I’d like to ask a couple questions about the business (unless this is the wrong forum for these kinds of discussions). To Luke 5:32 (and other SHLD shareholders): 1. Will you be exercising your Sears Canada rights? 2. Have you done any analysis on the real estate value of Sears Canada? 3. Do you come up with any realistic scenarios where the NAV of Sears Canada is worth less than $10/share? It is clear what Eddie and Bruce think about the value of Sears Canada’s assets (and they have more information than any outside shareholder). However, rather than simply coat tailing, I’d be interested to know if anyone else has done any work on the asset value? Analyzing the US real estate for SHLD seems a lot simpler given that they have retained a presence in many of the best malls in America. In contrast, Sears Canada has already sold off some of their best real estate (ex. Eaton Centre). As such, it’s harder to value the remaining real estate portfolio of Sears Canada with as much accuracy. Any thoughts on the value of Sears Canada would be much appreciated!! I look forward to reading another 100 pages about the arrogance of a hedge fund manager who tries to run a retailer and why SHLD is on the verge of bankruptcy… No I wont be exercising the rights. After the rights were announced and before the rights were assigned, Sears Canada shares (SEARF) traded to $8 and below. I bought all I could about 3x what I will be assigned from the rights. I will sell the rights dropping my cost basis to around $7.5 for each Sears Canada share. My estimate is Sears Canada is worth $13+ Link to comment Share on other sites More sharing options...
krazeenyc Posted October 21, 2014 Share Posted October 21, 2014 I apologize in advance for interrupting the informative discussion on fake mustaches and swastika rings. If people on the board don’t mind, I’d like to ask a couple questions about the business (unless this is the wrong forum for these kinds of discussions). To Luke 5:32 (and other SHLD shareholders): 1. Will you be exercising your Sears Canada rights? 2. Have you done any analysis on the real estate value of Sears Canada? 3. Do you come up with any realistic scenarios where the NAV of Sears Canada is worth less than $10/share? It is clear what Eddie and Bruce think about the value of Sears Canada’s assets (and they have more information than any outside shareholder). However, rather than simply coat tailing, I’d be interested to know if anyone else has done any work on the asset value? Analyzing the US real estate for SHLD seems a lot simpler given that they have retained a presence in many of the best malls in America. In contrast, Sears Canada has already sold off some of their best real estate (ex. Eaton Centre). As such, it’s harder to value the remaining real estate portfolio of Sears Canada with as much accuracy. Any thoughts on the value of Sears Canada would be much appreciated!! I look forward to reading another 100 pages about the arrogance of a hedge fund manager who tries to run a retailer and why SHLD is on the verge of bankruptcy… No I wont be exercising the rights. After the rights were announced and before the rights were assigned, Sears Canada shares (SEARF) traded to $8 and below. I bought all I could about 3x what I will be assigned from the rights. I will sell the rights dropping my cost basis to around $7.5 for each Sears Canada share. My estimate is Sears Canada is worth $13+ How do you value the Concord Pacific Redevelopments? Link to comment Share on other sites More sharing options...
zenith Posted October 21, 2014 Share Posted October 21, 2014 quick question as I still have not gotten the rights offering under SHLDR in my account and was told it may arrive tomorrow by the settlement date! Reading the F-10 I know that it is the right to buy 0.375643 shares of Sears canada in US Dollars, so at the current price of say $11 today that equates to about $9.68 per share which is why the rights are trading at around $.25 today? Also since sears canada trades under SRSC as well (as it just got listed) and as a US investor, which shares do you get if you exercise the rights? I assume it has to be SRSC and the Canadian shareholder gets SCC Link to comment Share on other sites More sharing options...
T-bone1 Posted October 21, 2014 Share Posted October 21, 2014 I'm more partial to the idea of Sears locations redeveloped as ebola quarantine centers. Where else can you ensure that risk of person-to-person contact is this low? +1! Link to comment Share on other sites More sharing options...
Matson125 Posted October 21, 2014 Share Posted October 21, 2014 Another 145,000 shares for Bruce B. https://www.bamsec.com/filing/91957414005845?cik=1214344&utm_source=filing-notifications&utm_medium=email&utm_content=filing-ownership&utm_campaign=filing-notifications Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now