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SHLDQ - Sears Holdings Corp


alertmeipp

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  • 1 month later...

https://finance.yahoo.com/news/sears-holdings-reports-second-quarter-203500393.html

 

I wonder what Bruce Berkowitz's estimate of fair value is presently?  Real estate must be worth at least $80/share!    ::)  Cheers!

 

Also, if I was a pension holder as a Sears employee, I would be looking for a good class-action lawyer to preserve whatever they can.  It was a total shit-show in Canada when Sears Canada went under, and the employees were screwed over.  Cheers!

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  • 4 weeks later...

I wonder what lesson could be learned here

this is a classic value trap

lots of value in RE

can buy way less than 50 cents on the dollar

a great investor at the helm

yet now it’s worth $0.40 in pre market

 

over the same period of time people would have done way better investing in FANG stocks

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I wonder what lesson could be learned here

this is a classic value trap

lots of value in RE

can buy way less than 50 cents on the dollar

a great investor at the helm

yet now it’s worth $0.40 in pre market

 

over the same period of time people would have done way better investing in FANG stocks

 

On the tale of averaging down and price action and on periods and cycles.

 

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only."  Charles Dickens

 

The following article depicts well the divergence when Sears (recently) was still trading at around 4$ and AMZN was still showing a quasi-exponential curve.

https://todaytrader.com/investing/stock-market/

 

Investing is truly fascinating. As always, conclusions are often reached in retrospect but, intermittently, "Truth Is Stranger than Fiction, But It Is Because Fiction Is Obliged to Stick to Possibilities; Truth Isn’t"    Mark Twain

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I'm currently reading "the Big Store" which is a big book about Sears.  It hit it's apex in the 1960s, started having trouble in the 1970s and has been like a tire with a slow leak for decades. Fascinating company that did everything right, then did everything wrong.

 

There is huge value in the real estate (there must be at least one other Seritage in there somewhere) and they have lost $10 Billion in recent years, so if they can reorg into a viable entity with a huge NOL it will be something that they can do something with. But what? 

 

The market cap of the common is $60mm, and I still like to dumpster dive, but this isn't something I'd buy.

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I wonder what lesson could be learned here

this is a classic value trap

lots of value in RE

can buy way less than 50 cents on the dollar

a great investor at the helm

yet now it’s worth $0.40 in pre market

 

over the same period of time people would have done way better investing in FANG stocks

 

 

 

The lesson is management matters. A lot. What they do, not what they say.

 

I owned SHLD a few years ago after following for a while. Sold out shortly and for a tiny profit.

Problem was Lampert always gave my stomach knots. The value creation methods of people like Marchionne, Walton, or Malone, can be spotted in the first decade or so of their careers with reasonable personal judgement and some common sense due diligence. After that, you can invest alongside them with far more certainty and still earn great returns.

 

Thankfully, I realized it here early enough. Lampert clearly doesn't feel that same 'steward of capital' responsibility towards other SHLD investors. He also had no experience running a Main Street business, let alone a retail one, let alone a turnaround. He treats the company like his personal fiefdom. His capital allocation was also completely sub-optimal to anyone who looked. That seemed clear.

Sears and Kmart were not dead and buried when he got them. He could easily have sold off loss-making stores when property prices were hot, kept much of the best ones with better earnings, reinvested in the cash earning stores, put the proceeds in an ever increasing stock portfolio a la Berkshire instead of doing buybacks, done Seritage-type JVs far sooner, the list goes on and on. Shrinking in order to grow quicker and more intelligently in an area he was better at (ie. investing).

 

Even though retail changes quickly and the competition is brutal, he took his sweet time trying to spin or highlight any worthwhile value that the market could easily observe, and instead let the core business literally crumble.

Even the spinning and highlighting he did badly and slowly given how much value was actually there earlier on.

The amount of time and opportunity he clearly wasted was the canary in the coalmine for me and, I think, a glaring insight into how humble (or not) he genuinely was being with himself and all his various business partners.

 

Doesn't mean money can't be made by someone using a basket strategy with low price to asset value stocks, but on the individual security level you're better off sticking with people who are actively and obviously creating substantial shareholder value every year, or two, or three, over a sustained time frame. People who are experienced, humble, and clearly know their business and what they're doing. Turnaround experts too, if that's the situation.

It's okay to wait a while with big individual issue bets, in order to confirm that management is truly the professional and personal type you want to be in business with.

Lampert always just came off as a rich hedgefunder who wanted a personal play thing. Even, to some extent, during his better moments.

 

 

 

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I've owned this a bunch in years prior, and it was always an awesome, predictable and profitable trade. But much like ajc mentioned, after a while it just became obvious this was doomed. I mean the stock predictably went up 50-200% at various points on nothing but insider buys, hedge funds like Baker pumping, and random jack ups of the borrow cost. But it ALWAYS came back and the operating results were never anything other than disastrous. I just dumped my monthly spec allocation in TOO options but if I was to gamble more I'd maybe take a flyer here and hope for a 30-50% bounce.

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According to the web, Eddie's worth is down to $1.4B, wow!

 

As a person who watched this thread closely, I commend the people who said "the wheels were falling off the bus" years ago.  I definitely have less respect for all successful hedge fund managers now.  The likes of Eddie and Berkowitz and Chou could easily go from hero to zero in the course of a downturn.

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Guest longinvestor

This is a classic case of a man with reputation and money meeting a bad business. Sears was dying as Walmart was rising. That was a hell of a long time ago. Going up against Sam Walton, with discount retailing in his DNA is next to impossible. Money managers don’t stand a chance.

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Guest longinvestor

It's official, Sears files for Chapter 11 bankruptcy.

 

It only took 9,195 posts! What a wild, predictable, yet irrationally hopeful ride.

 

SHLD is not the only name. If you sort by replies on the investment ideas page, below is page 1. (Page 2 is similar). There are winners here as well!

Vigorous debate over value or "pounding in what you shout out - Munger" ?

 

BAC-WT - Bank of America Warrants 

ALS.TO - Altius Minerals 

AAPL - Apple Inc. 

VRX - Valeant Pharmaceuticals International Inc.

BBRY - Blackberry (Formerly RIM)

FCAU - Fiat Chrysler Automobiles 

FGE.to - Fortress Paper (formerly FTP.to) 

BH - Biglari Holdings 

TSLA - Tesla Motors 

AMZN - Amazon.com Inc. 

AIG - American International Group 

GOOGL - Google 

SD - SandRidge Energy

 

 

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