SHLDQ - Sears Holdings Corp

[stahleyp]

weren't you also adamant that rimm was a terrible investment around $7 last year? ;)

 

you're timing is a bit off. I was adamant that is was a terrible investment in the $40s when pw and you were bullish. :)

 

If earning 200% or so is wrong, I don't wanna be right! ;)

[Guest wellmont]

If earning 200% or so is wrong, I don't wanna be right! ;)

 

don't know about that. what I do know (because i read your post) is you were bullish on rimm Leaps at Much Higher Prices. and of course anybody buying those would have turned dollar bills into donuts. I am glad I manage to resist that advice. :) cheers!

[stahleyp]

If earning 200% or so is wrong, I don't wanna be right! ;)

 

don't know about that. what I do know (because i read your post) is you were bullish on rimm Leaps at Much Higher Prices. and of course anybody buying those would have turned dollar bills into donuts. cheers!

 

I'm wrong plenty of times. Because I'm thinking about an idea doesn't mean I pull the trigger. That happens all the time. There's always a risk but if something is trading below its cash and estimated patent value, it's hard to go wrong. That one worked out splendidly.  8)

[Guest wellmont]

I'm wrong plenty of times. Because I'm thinking about an idea doesn't mean I pull the trigger. That happens all the time. There's always a risk but if something is trading below its cash and estimated patent value, it's hard to go wrong. That one worked out splendidly.  8)

 

well let's hope nobody else followed the advice in that post that, it turns out, you say you were just "thinking about". :)

[stahleyp]

I'm wrong plenty of times. Because I'm thinking about an idea doesn't mean I pull the trigger. That happens all the time. There's always a risk but if something is trading below its cash and estimated patent value, it's hard to go wrong. That one worked out splendidly.  8)

 

well let's hope nobody else followed the advice in that post that, it turns out, you say you were just "thinking about". :)

 

Let's hope no ones follows me into anything. We should all feel sorry for that! ;)

[Guest wellmont]

Let's hope no ones follows me into anything. We should all feel sorry for that! ;)

if only the leap post didn't exist you could taunt me with impunity! doohh! cheers!

[stahleyp]

Let's hope no ones follows me into anything. We should all feel sorry for that! ;)

if only the leap post didn't exist you could taunt me with impunity! doohh! cheers!

 

hahaha  ;D

 

Thankfully, where it counts, things still worked out quite well. :)

[merkhet]

if I like a stock better I make it a bigger position % wise in my portfolio regardless of market cap. That seems logical to me. Other investors may do things differently. But in the end all this discussion of who is going to own it who is going to buy more of it, is irrelevant. what is going on in the business? from what i can tell it's doing really poorly and the stock reflects that on a daily basis.

 

If Fairholme has AUM of $12B and 50% of it is in AIG, then by what you said earlier, they would have to put > $6 billion to show that Berkowitz "likes SHLD more than AIG," which is impossible to do in a $4 billion company. The math just doesn't work out.

 

Therefore, because of various restrictions, like the investable market capitalization of each company, it is impossible to tell whether Berkowitz likes AIG better than SHLD or vice versa based purely on how much of his fund is in each name.

 

not following. you're saying if he didn't have so much money in aig he could buy more shld? that's self evident. But he has voted with his AUM. The fact is he has made his big bet on AIG and a smaller bet on shld. That's been smart, because the business of shld (and stock) continues to circle the drain, while aig is performing very well.

 

wellmont, I'm saying that he hasn't "voted" with his AUM at all. Even if Berkowitz wanted to put $6 billion into Sears... how would he do that given that the company trades for $4 billion?  Even when the company was trading at $6 billion, how would he make SHLD a large percentage of his fund? We're not even at the point of talking about the fact that there are other holders of SHLD. The math just doesn't work out.

 

Disclosure -- my $40 limit order filled today, so as of this point, I might be just talking my book. :)

[locatevalue]

I doubled down today increasing from 5% of 10% of portfolio after few months gap, I feel its undervalued from all scenarios i can think of and also think its not as plain and simple to turn this ship like financials(Wells,BAC etc) thats why not going overboard on allocation but if price drops like this i might add more later. It seems ,Patience is the name of this game!(mainly this stock!)

[Parsad]

Guys, stop the personal attacks, otherwise you go to the timeout corner!  ;D

 

I've never seen anyone who has always been right about everything, so everyone get off yer high horses and show some respect for one another.  Cheers!

[BTShine]

Guys, stop the personal attacks, otherwise you go to the timeout corner!  ;D

 

I've never seen anyone who has always been right about everything, so everyone get off yer high horses and show some respect for one another.  Cheers!

 

+1 

 

Thank you, Parsad.

[John Hjorth]

Link to some comic relief, ref. Eric's light bulp acid test on SHLD:

 

http://consc.net/misc/lightbulb.html .

 

Left to my computer I have a page written by Charlie Munger, "talking to me" about determination, decisiveness and conviction before trading... - "Are you really sure [determined] about this?", as a last reminder and call for check up, before pressing the button.

 

The determination, decisiveness and conviction of the investors posting in this topic certainly calls for respect!

 

Now back to SHLD.

[luck]

it looks like in Q2 baker street capital added a 14.45% new position in SHLD on top of the 67.44% call position carrying over from last quarter.  guessing they are short this position to offset risk - but perhaps not.

[treasurehunt]

The difference with Walmart and sears online is:

- In Walmarts case you have to wait for a week or more to pick up your order.

- SHLD is working on you being able to pick up your order within minutes of ordering it online - so far no one that I know is doing this. Eddie calls this integrated retail.

 

From walmart.com:

 

<b>Pick Up Today at Your Walmart Store</b>

 

<i>Pick Up Today is a free service that allows you to order store items online and pick them up at your Walmart store that same day (or the next day if you order after 6:00 p.m. local time).</i>

 

Looks like Home Depot offers this service as well.

 

Perhaps Sears will have something better than this although I am not sure what.

 

[stahleyp]

Guys, stop the personal attacks, otherwise you go to the timeout corner!  ;D

 

I've never seen anyone who has always been right about everything, so everyone get off yer high horses and show some respect for one another.  Cheers!

 

Yes, I'll admit to fault with this. Sorry for being on the immature side with ya, wellmont.

 

On a more productive note, it loos like the boys at Nantahal have added some calls too.

[tombgrt]

Bought a 3% otm call (jan 2015 strike 60) position today. It's more speculation than anything else really. Sitting on some gains and think it's an interesting position to have without risking too much.

[alertmeipp]

are those funds longing the stock because they can lend it out in an very attractive rate? hope we can get % on lending shares

[Guest wellmont]

Guys, stop the personal attacks, otherwise you go to the timeout corner!  ;D

 

I've never seen anyone who has always been right about everything, so everyone get off yer high horses and show some respect for one another.  Cheers!

 

Yes, I'll admit to fault with this. Sorry for being on the immature side with ya, wellmont.

 

On a more productive note, it loos like the boys at Nantahal have added some calls too.

 

we're 8).  :D

[wisdom]

you are right treasure hunt. I wasn't aware that walmart had started this as well.

 

There are very few retailers that will be able to provide the same day service as you need a large footprint that covers most of the population.

 

It is inevitable that other competitors will do that - especially walmart with its excellent logistics, inventory mgmt and population coverage. But, it could be advantage over purely online retailers or retailers with smaller footprints.

[CorpRaider]

Walmart has enough to worry even stocking its shelves for plain old in-store shoppers. 

[tng]

are those funds longing the stock because they can lend it out in an very attractive rate? hope we can get % on lending shares

 

Not that familiar with options strategies, but can't you do it synthetically by writing puts and buying calls at the same strike?

[no_free_lunch]

I think at the very minimum, sears could be shrunken down so that they only sell the profitable items.  They wouldn't go well together but an appliance section and a clothing section could probably both be profitable.  There are probably some other sections that will do well but I don't have the data to know what they are.

 

Appliances: I bought my dishwasher from sears so I am just reflecting my own experience.  Sears was the cheapest/best warranty option where I had access to a decent quality showroom (this eliminated home depot and amazon).  There were a few local furniture shops which came close or matched the price but if they aren't beating the sears price I thought I was better off with a larger player. 

 

Clothing: I don't personally shop at sears but the 10-q states that clothing & apparel had 7 consecutive quarters of positive comps. 

 

The point is that if they do this sort of refocusing on profitable areas couldn't they turn it around?  All they need to do is get the retail to cash flow neutral.  You go after leasing and the other ventures for the remainder.

 

Leasing might add (and this is a very rough estimate) $12 (70% of average strip mall per sq ft ) for the kmarts and $26 (70% of average enclosed mall per sq ft ) for the sears.  Assume that they reduce to the point where they are leasing 30% of their current space, split 2:1 kmart : sears.  That's 48M for the kmart or $576M per year.  There's 24M for the sears, or $624M per year.  Or an extra $1.2B revenue per year.  There would be proportionate building maintenance costs and possibly additional taxes but do your own math on what that might contribute.  Even if you just clear 30% that's an extra $360M per year profit on a $4B stock.  So Eddie can buy back 9-10% of the stock per year if nothing else.  This alone would support the stock and probably cause it to move up.

 

If you get any kind of return on the retail side that's just gravy.  Other retailers make 3-7% net typically.  If you reduce to $25B (from $40B today) in sales and clear 2% even, there's another $500M.  The stock would have to at least double at that point.

 

There are also the ventures:

 

Parent Sears Holdings Corp. has formed a subsidiary, Ubiquity Critical Environments LLC, tasked with converting some of the more than 2,500 Sears and Kmart properties to data storage facilities with servers, chillers and backup generators. It also plans to top all of its buildings with telecommunications towers that would serve a wide range of needs, including, ironically, those of the e-commerce rivals that Sears is struggling to match.

..

Converting a 100,000-square-foot store to a data center could make available about 5 megawatts of electricity dedicated to servers, industry experts say. Development costs can run $50 million to $60 million. Once operating, though, a 5-megawatt data center could produce $7 million to $10 million per year in rent. 

..

Meanwhile, Ubiquity seeks deals with cellphone carriers such as Verizon Communications Inc. and AT&T Inc. to affix antennas to roofs of Sears and Kmart buildings

http://www.chicagobusiness.com/article/20130511/ISSUE01/305119976/why-sears-sees-salvation-in-servers

 

 

[plato1976]

My recent exp on dish washer is on the contrary.

Home depot provides way better !/$

Home depot charges way less installation fee, etc. and in overall it's a better choice

btw, what's "quality showroom" ? why do we need this for a dishwasher purchase ?

 

I think at the very minimum, sears could be shrunken down so that they only sell the profitable items.  They wouldn't go well together but an appliance section and a clothing section could probably both be profitable.  There are probably some other sections that will do well but I don't have the data to know what they are.

 

Appliances: I bought my dishwasher from sears so I am just reflecting my own experience.  Sears was the cheapest/best warranty option where I had access to a decent quality showroom (this eliminated home depot and amazon).  There were a few local furniture shops which came close or matched the price but if they aren't beating the sears price I thought I was better off with a larger player. 

 

Clothing: I don't personally shop at sears but the 10-q states that clothing & apparel had 7 consecutive quarters of positive comps. 

 

The point is that if they do this sort of refocusing on profitable areas couldn't they turn it around?  All they need to do is get the retail to cash flow neutral.  You go after leasing and the other ventures for the remainder.

 

Leasing might add (and this is a very rough estimate) $12 (70% of average strip mall per sq ft ) for the kmarts and $26 (70% of average enclosed mall per sq ft ) for the sears.  Assume that they reduce to the point where they are leasing 30% of their current space, split 2:1 kmart : sears.  That's 48M for the kmart or $576M per year.  There's 24M for the sears, or $624M per year.  Or an extra $1.2B revenue per year.  There would be proportionate building maintenance costs and possibly additional taxes but do your own math on what that might contribute.  Even if you just clear 30% that's an extra $360M per year profit on a $4B stock.  So Eddie can buy back 9-10% of the stock per year if nothing else.  This alone would support the stock and probably cause it to move up.

 

If you get any kind of return on the retail side that's just gravy.  Other retailers make 3-7% net typically.  If you reduce to $25B (from $40B today) in sales and clear 2% even, there's another $500M.  The stock would have to at least double at that point.

 

There are also the ventures:

 

Parent Sears Holdings Corp. has formed a subsidiary, Ubiquity Critical Environments LLC, tasked with converting some of the more than 2,500 Sears and Kmart properties to data storage facilities with servers, chillers and backup generators. It also plans to top all of its buildings with telecommunications towers that would serve a wide range of needs, including, ironically, those of the e-commerce rivals that Sears is struggling to match.

..

Converting a 100,000-square-foot store to a data center could make available about 5 megawatts of electricity dedicated to servers, industry experts say. Development costs can run $50 million to $60 million. Once operating, though, a 5-megawatt data center could produce $7 million to $10 million per year in rent. 

..

Meanwhile, Ubiquity seeks deals with cellphone carriers such as Verizon Communications Inc. and AT&T Inc. to affix antennas to roofs of Sears and Kmart buildings

http://www.chicagobusiness.com/article/20130511/ISSUE01/305119976/why-sears-sees-salvation-in-servers

[no_free_lunch]

Again, just my point of view on the appliances.  When I went to home depot, they didn't have the models I had liked on-online.  Then I couldn't actually find someone to talk to for about 10 minutes.  I just had a few basic questions about the differences between the models on the floor and the models on the internet, they couldn't answer them.  They really didn't care and it felt like I was interrupting them.

 

At sears there is a salesman, he can answer basic questions and otherwise stays out of your way.  There were more floor models and they had the one that was on-sale so I could see exactly what I was getting.  These little details can make a difference.  I don't know maybe I'm just particular.

[Luke 532]

I think at the very minimum, sears could be shrunken down so that they only sell the profitable items.  They wouldn't go well together but an appliance section and a clothing section could probably both be profitable.  There are probably some other sections that will do well but I don't have the data to know what they are.

 

Appliances: I bought my dishwasher from sears so I am just reflecting my own experience.  Sears was the cheapest/best warranty option where I had access to a decent quality showroom (this eliminated home depot and amazon).  There were a few local furniture shops which came close or matched the price but if they aren't beating the sears price I thought I was better off with a larger player. 

 

Clothing: I don't personally shop at sears but the 10-q states that clothing & apparel had 7 consecutive quarters of positive comps. 

 

The point is that if they do this sort of refocusing on profitable areas couldn't they turn it around?  All they need to do is get the retail to cash flow neutral.  You go after leasing and the other ventures for the remainder.

 

Leasing might add (and this is a very rough estimate) $12 (70% of average strip mall per sq ft ) for the kmarts and $26 (70% of average enclosed mall per sq ft ) for the sears.  Assume that they reduce to the point where they are leasing 30% of their current space, split 2:1 kmart : sears.  That's 48M for the kmart or $576M per year.  There's 24M for the sears, or $624M per year.  Or an extra $1.2B revenue per year.  There would be proportionate building maintenance costs and possibly additional taxes but do your own math on what that might contribute.  Even if you just clear 30% that's an extra $360M per year profit on a $4B stock.  So Eddie can buy back 9-10% of the stock per year if nothing else.  This alone would support the stock and probably cause it to move up.

 

If you get any kind of return on the retail side that's just gravy.  Other retailers make 3-7% net typically.  If you reduce to $25B (from $40B today) in sales and clear 2% even, there's another $500M.  The stock would have to at least double at that point.

 

There are also the ventures:

 

Parent Sears Holdings Corp. has formed a subsidiary, Ubiquity Critical Environments LLC, tasked with converting some of the more than 2,500 Sears and Kmart properties to data storage facilities with servers, chillers and backup generators. It also plans to top all of its buildings with telecommunications towers that would serve a wide range of needs, including, ironically, those of the e-commerce rivals that Sears is struggling to match.

..

Converting a 100,000-square-foot store to a data center could make available about 5 megawatts of electricity dedicated to servers, industry experts say. Development costs can run $50 million to $60 million. Once operating, though, a 5-megawatt data center could produce $7 million to $10 million per year in rent. 

..

Meanwhile, Ubiquity seeks deals with cellphone carriers such as Verizon Communications Inc. and AT&T Inc. to affix antennas to roofs of Sears and Kmart buildings

http://www.chicagobusiness.com/article/20130511/ISSUE01/305119976/why-sears-sees-salvation-in-servers

 

Especially if when they shrink and close stores the cost of carrying those closed (but not yet sold and not yet sub-leased) stores is a minimal cost.  It would be interesting to know the average cost of on a monthly or quarterly basis of how much it costs SHLD to have empty stores.