Greyhound Posted August 27, 2017 Share Posted August 27, 2017 Anyone have thoughts on the thesis advanced on Sears in this article: https://seekingalpha.com/article/4094199-sears-holdings-esl-investments-berkshire-hathaway-broad-daylight The article essentially highlights the control that ESL and Eddie has on SHLD. On the flip side, within ESL, SHLD and its spin offs essentially comprise all the assets in ESL (except for Autonation). Could it be that once PBGC is taken care off, Eddie & ESL would be in total control of SHLD. Given that both ESL and SHLD interest are essentially one in the same that both ESL and SHLD could combine? Link to comment Share on other sites More sharing options...
beaufort Posted September 17, 2017 Share Posted September 17, 2017 I can imagine that SHLD buys ESL or merges with it, leaving SHLD the controlling business. I understand the thesis regarding the NOLs and the permanent capital vehicle. What I don't have a good handle on is what the SHLD assets are worth: the REMIC stores, inventory, the Sears reinsurance business, Innovel, the IP for KCD, SYW, the credit card business and of course the remaining owned RE and leases. If/when the retail operation is shut down or gets to an appropriate size focusing on the best categories of appliances and mattresses, you can see how SHLD as an investment could work out. EL in two Chairman's letters said that every time SHLD shuts a store down, they make money after taking into account expenses including costs related to shuttering the store. Of course, this is based on assets being left over following the cash burning retail operation transformation so that a vehicle for permanent capital is necessary. Given that the NOLs are at the HoldCo level, the Kmart or Sears retail business could go under. The other assets except inventory are held in different corporations and will therefore be bankruptcy remote, preserving the NOLs. On a positive note, I view the Amazon Kenmore deal as a huge change. I recall reading that Amazon paid Sears for the inventory, though I don't have a source. If Amazon did pay for the inventory, SHLD is advancing EL's goal of becoming an asset light business. I also recall that Sears will be storing the appliances, along with providing delivery, installation and inventory. SHLD is interesting for a number of reasons, but it will probably remain entertainment for me only. I don't have confidence in my ability to estimate the value. Link to comment Share on other sites More sharing options...
Greyhound Posted October 5, 2017 Share Posted October 5, 2017 Has anyone been following the court room drama involving Sears Canada's CCAA proceedings? http://cfcanada.fticonsulting.com/searscanada/motions.htm Seems like there's several deals on the table. - 12 real estate transactions (11 stores and 1 Calgary D.C.) - Corbeil Appliance subsidiary to be sold - SLH Transportation subsidiary to be sold to CAT - Viking intellectual property to be sold to Canadian Tire - Possible going concern bid by former chair - Brandon Stranzi No financial details have been disclosed; not even in aggregate. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted October 6, 2017 Share Posted October 6, 2017 Another $100M of loans from ESL to Sears, this time the rate is 11% and not 8%, secured by real estate. Link to comment Share on other sites More sharing options...
DooDiligence Posted October 6, 2017 Share Posted October 6, 2017 Another $100M of loans from ESL to Sears, this time the rate is 11% and not 8%, secured by real estate. Someone on Twitter joked that at this rate, they'll be paying 14% before too long. Link to comment Share on other sites More sharing options...
Greyhound Posted October 6, 2017 Share Posted October 6, 2017 On the bright side its only the incremental tranche that is at 11%.... the rest remains at 8% Link to comment Share on other sites More sharing options...
Sergio8 Posted October 7, 2017 Share Posted October 7, 2017 Indeed, 11% seems to be a lot, but what might be encouraging is that they usually need much more money for the holyday season. Curious to see if they can manage to get some decent results on Q4 this year, as they have fewer expenses and unprofitable stores. Usually, when a business closes every single division what is not profitable in it, we see encouraging results... We will see if that applies to SHLD. Link to comment Share on other sites More sharing options...
Greyhound Posted October 7, 2017 Share Posted October 7, 2017 Indeed, 11% seems to be a lot, but what might be encouraging is that they usually need much more money for the holyday season. Curious to see if they can manage to get some decent results on Q4 this year, as they have fewer expenses and unprofitable stores. Usually, when a business closes every single division what is not profitable in it, we see encouraging results... We will see if that applies to SHLD. I suspect that this is more or less a working capital loan to ramp up for holiday inventory purchases. This is especially the case given recent reports of supplier constrains on credit. Presumably, after the peak season is done the loan could be repaid. So on the short term basis, the higher interest rate shouldnt be a problem. Now that we are entering the peak busy season, I think the bulk of the non performing store closure announcements should have been made already and that the dividends from the cost reduction strategy should show in the comps. Link to comment Share on other sites More sharing options...
Sergio8 Posted October 7, 2017 Share Posted October 7, 2017 To be honest, I don't have any hopes for the comps on a short term basis: as everybody there probably knows, retail turnarounds don't tend to work. Sears needs their new businesses to work for it to have positive comps, and I don't know if we can expect that any time soon. However, I still believe that when you kill everything that is not profitable and cut the costs, you can manage a profit and hence protect the net asset value of the company. And this is all what we need for that investment to work fine today. In the longer term, if their ventures work, we might have a new business with organic growth, but this sounds very demanding at this stage where they need to stop the erosion of the net asset value of the company (which, I believe, has been cut by 80% since the start of this thread, although I am not counting the right issues and spin-offs when wrtiting that number, and do not assign any value to their SYW asset, which might be conservative). Link to comment Share on other sites More sharing options...
nkp007 Posted October 7, 2017 Share Posted October 7, 2017 Lampert has overseen one of the largest and longest destruction of value spectacles I have seen. Would be hilarious if as part of his final farewell he decides to rip the shorts too. http://www.nasdaq.com/symbol/shld/short-interest Other than that, who the heck knows what's going to happen. Link to comment Share on other sites More sharing options...
Greyhound Posted October 7, 2017 Share Posted October 7, 2017 To be honest, I don't have any hopes for the comps on a short term basis: as everybody there probably knows, retail turnarounds don't tend to work. Sears needs their new businesses to work for it to have positive comps, and I don't know if we can expect that any time soon. However, I still believe that when you kill everything that is not profitable and cut the costs, you can manage a profit and hence protect the net asset value of the company. And this is all what we need for that investment to work fine today. In the longer term, if their ventures work, we might have a new business with organic growth, but this sounds very demanding at this stage where they need to stop the erosion of the net asset value of the company (which, I believe, has been cut by 80% since the start of this thread, although I am not counting the right issues and spin-offs when wrtiting that number, and do not assign any value to their SYW asset, which might be conservative). I agree, turning around a retail business is tough. Even Buffett has said that on more than one occasion citing his Baltimore department store experience as an example. Sears will certainly need to stop the cash burn in order to retain the NAV. Keep in mind that beyond the obvious retailing store business and the real estate that comes with that, they do have all the other lines of businesses that could potentially be spun off: KCD, Home services, Innovel, Sears Re (which apparently provides insurance of 20-40% unrelated to its business), SYW, WallyHome, Auto Centres. On the topic of the auto centres, SHLD recently filed an 8K indicating an amendment to a loan agreement permitting the sale of the auto centres. Link to comment Share on other sites More sharing options...
Sergio8 Posted October 8, 2017 Share Posted October 8, 2017 I also strongly believe that there are lots of divisions there that make the asset value much higher than today's stock price (at least 50$ per share on a sum of the parts basis) and that they have some flexibility, especially with Home Services, Innovel and real estate which I think are valuable and mostly available for spin or sale. And this flexibility can give us some hope on Sears' ability to realize their asset value. However, they lost some flexibility with KCD where there is a ring fencing agreement with PGBC which can restrict their moves (as shown with the Craftsman deal, which was not bad, but they have not sold it outright and this might be because of a restriction), and their asset values are still quickly eroding. The actions they have taken this year were mandatory, and I hope it will be a great first step towards an inflexion point. We shall see that soon... Link to comment Share on other sites More sharing options...
dyow Posted October 14, 2017 Share Posted October 14, 2017 Edit: it doesn't look like a sale it looks like a distribution of 1.1M shares and 700K shares were given to Bruce. that seems high to me as a prorata distribution...I guess these are for redemptions but not sure....anyways will look into it Todays form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417007297/xslF345X03/p7682392.xml Previous form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417003017/xslF345X03/p7448797.xml Link to comment Share on other sites More sharing options...
Greyhound Posted October 15, 2017 Share Posted October 15, 2017 Edit: it doesn't look like a sale it looks like a distribution of 1.1M shares and 700K shares were given to Bruce. that seems high to me as a prorata distribution...I guess these are for redemptions but not sure....anyways will look into it Todays form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417007297/xslF345X03/p7682392.xml Previous form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417003017/xslF345X03/p7448797.xml Here’s the explanation Represents a pro-rata in-kind distribution of Common Shares of the Issuer by a private fund managed by Fairholme Capital Management, LLC ("Fairholme") to its limited partners into accounts over which the Reporting Persons no longer have beneficial ownership. The distribution was made pursuant to a previously approved plan of liquidation and termination of the private fund. The Reporting Persons disclaim beneficial ownership in the private fund except to the extent of its pecuniary interest, if any, therein. Link to comment Share on other sites More sharing options...
dyow Posted October 15, 2017 Share Posted October 15, 2017 Edit: it doesn't look like a sale it looks like a distribution of 1.1M shares and 700K shares were given to Bruce. that seems high to me as a prorata distribution...I guess these are for redemptions but not sure....anyways will look into it Todays form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417007297/xslF345X03/p7682392.xml Previous form 4 https://www.sec.gov/Archives/edgar/data/1056831/000091957417003017/xslF345X03/p7448797.xml Here’s the explanation Represents a pro-rata in-kind distribution of Common Shares of the Issuer by a private fund managed by Fairholme Capital Management, LLC ("Fairholme") to its limited partners into accounts over which the Reporting Persons no longer have beneficial ownership. The distribution was made pursuant to a previously approved plan of liquidation and termination of the private fund. The Reporting Persons disclaim beneficial ownership in the private fund except to the extent of its pecuniary interest, if any, therein. I read all the notes I am trying to figure out what it means, if anything. Link to comment Share on other sites More sharing options...
tooskinneejs Posted October 16, 2017 Share Posted October 16, 2017 Bruce Berkowitz has left Sear's board. Wonder if he plans to liquidate. Link to comment Share on other sites More sharing options...
Greyhound Posted October 16, 2017 Share Posted October 16, 2017 Bruce Berkowitz has left Sear's board. Wonder if he plans to liquidate. The volumes on the exchange seem to suggest he is dumping them on the market. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted October 16, 2017 Share Posted October 16, 2017 Hold on guys, Bruce Berkowitz has slammed the table repeated on Sears. Still incredible value to be unlocked here. http://valueplays.net/wp-content/uploads/Screen-Shot-2016-02-02-at-5.35.15-PM-624x228.png Link to comment Share on other sites More sharing options...
Greyhound Posted October 16, 2017 Share Posted October 16, 2017 Hold on guys, Bruce Berkowitz has slammed the table repeated on Sears. Still incredible value to be unlocked here. http://valueplays.net/wp-content/uploads/Screen-Shot-2016-02-02-at-5.35.15-PM-624x228.png That screenshot is from Bruce! Link to comment Share on other sites More sharing options...
adesigar Posted October 16, 2017 Share Posted October 16, 2017 Bruce Berkowitz has left Sear's board. Wonder if he plans to liquidate. Mr. Berkowitz’s decision was not the result of any disagreement with the Company on matters related to the Company’s operations, policies or practices. They specify what the reason was not. They don't specify what it was. Maybe it was personal. My guess is 1. He didn't like what happened with SRSC and he wants to get out of SHLD. OR 2. He thinks the plan to return to profitability is going to work and he want to buy more. Either way I think he is leaving so he can trade without restrictions. Link to comment Share on other sites More sharing options...
nkp007 Posted October 16, 2017 Share Posted October 16, 2017 Maybe he realizes that Lampert is a total nut and will continue to burn cash. Link to comment Share on other sites More sharing options...
dyow Posted October 16, 2017 Share Posted October 16, 2017 This thread is nearly a thousand pages. This stock needs closure. One way or another, I think we will have an answer soon enough. Link to comment Share on other sites More sharing options...
GregS Posted October 16, 2017 Share Posted October 16, 2017 Bruce Berkowitz has left Sear's board. Wonder if he plans to liquidate. Mr. Berkowitz’s decision was not the result of any disagreement with the Company on matters related to the Company’s operations, policies or practices. They specify what the reason was not. They don't specify what it was. Maybe it was personal. My guess is 1. He didn't like what happened with SRSC and he wants to get out of SHLD. OR 2. He thinks the plan to return to profitability is going to work and he want to buy more. Either way I think he is leaving so he can trade without restrictions. I find it damn near impossible to believe he is leaving because he wants to buy more stock. Link to comment Share on other sites More sharing options...
Greyhound Posted October 17, 2017 Share Posted October 17, 2017 Bruce Berkowitz has left Sear's board. Wonder if he plans to liquidate. Mr. Berkowitz’s decision was not the result of any disagreement with the Company on matters related to the Company’s operations, policies or practices. They specify what the reason was not. They don't specify what it was. Maybe it was personal. My guess is 1. He didn't like what happened with SRSC and he wants to get out of SHLD. OR 2. He thinks the plan to return to profitability is going to work and he want to buy more. Either way I think he is leaving so he can trade without restrictions. I find it damn near impossible to believe he is leaving because he wants to buy more stock. I doubt it too. He'll need to leave the board on Oct 31 and wait for Q3 results to be released before he can buy more stock. Link to comment Share on other sites More sharing options...
BTShine Posted October 17, 2017 Share Posted October 17, 2017 Bloomberg piece on this said “In statement released Monday, Fairholme said Berkowitz joined the Sears board to better communicate his views about the retailer. “Mr. Berkowitz believes that he has achieved that objective,” according to the statement.“ https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2017-10-16/berkowitz-liquidates-hedge-fund-that-owned-sears-holdings-shares Link to comment Share on other sites More sharing options...
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