SHLDQ - Sears Holdings Corp

[willie2013]

I agree with Parsad & ourkid8.

 

It has been a great couple of days, but it's largely unknown how this will continue to play out. However, it's a great training ground for maintaining equanimity in the face of euphoria. Perhaps it would be prudent for most people to set a certain trigger price at which they sell part or all of their position -- so as not to let emotions take free reign on the decision-making apparatus.

 

I did this and sold too soon perhaps!  :)

[CorpRaider]

I'm not noticing any real change in sentiment on this board.  There were many many posts on SHLD in the last few weeks.  The only change really is that the bears are totally absent, or at least silent.

[BG2008]

Anyone saw Baker Street's 13F?  They list 67.4% of their portfolio as Sears Calls.  I believe that the 13Fs take the underlining value rather than the value of the calls or the spreads.  I don't have a position in this.  But it probably would be smart to know what Baker Street's call or call spread positions are.  For those of you that have options in this.  It probably would be nice to know the strike price of the call that they sold.  Seems like they doubled down on Sears common as well in Q2.   

 

http://whalewisdom.com/filer/baker-street-capital-management-llc

 

 

[Luke 532]

Anyone saw Baker Street's 13F?  They list 67.4% of their portfolio as Sears Calls.  I believe that the 13Fs take the underlining value rather than the value of the calls or the spreads.  I don't have a position in this.  But it probably would be smart to know what Baker Street's call or call spread positions are.  For those of you that have options in this.  It probably would be nice to know the strike price of the call that they sold.  Seems like they doubled down on Sears common as well in Q2.   

 

http://whalewisdom.com/filer/baker-street-capital-management-llc

 

$60/$70 bull call spread if I remember correctly.

[thepupil]

Just look at the open interest in the 60 and 70 call spread of Jan 2015 and that will answer what contracts they are long and short

Strike Symbol Last Chg Bid Ask Vol Open Int

60.00 SHLD150117C00060000 9.00 Up 0.80 8.95 10.05 166 107,694

62.50 SHLD150117C00062500 5.80 0.00 7.95 9.30 17 121

65.00 SHLD150117C00065000 6.34 0.00 7.15 8.50 6 52

67.50 SHLD150117C00067500 2.14 0.00 6.50 7.65 46 272

70.00 SHLD150117C00070000 6.50 Up 1.19 6.25 7.00 212 92,745

[Myth465]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

[T-bone1]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

 

I would take a management team that creates value over one that spells it out any day of the week.  There have been times when both Fairfax and Berkshire (along with ELF, LUK and a number of others) haven't spelled it out and it has been a great opportunity for long term investors to do their work and take a position at a good price.  I would imagine Mr. Lampert is perfectly happy with his shareholder base.

[Luke 532]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

 

I would take a management team that creates value over one that spells it out any day of the week.  There have been times when both Fairfax and Berkshire (along with ELF, LUK and a number of others) haven't spelled it out and it has been a great opportunity for long term investors to do their work and take a position at a good price.  I would imagine Mr. Lampert is perfectly happy with his shareholder base.

 

2005 Shareholder letter...

 

“Finally, my hope is that our 10-Qs, annual reports, proxy statements and press releases will provide a significant amount of valuable information to our owners, both to inform you of the results of the company as well as to help you evaluate our future possibilities.  These will be the primary way we communicate with shareholders.  We believe that management will optimize the company’s performance by an unwavering focus on managing the business, serving our customers, and working to constantly improve operations.  As a related operating principle, we believe that substantial amounts of time spent on investor relations activities such as roadshows and investor conferences distract and detract from accomplishing our fundamental objective of creating value for all our owners." 

 

Lampert likely doesn't care about the average investor who won't/can't do their own research.  He cares mostly about the sophisticated investor that recognizes a great opportunity when it comes along.

[OracleofCarolina]

 

I think the Neiman Marcus sale changed some of the views on retailers, which was very negative for a while.  A recovering U.S. economy, retail acquisitions, better commercial real estate prices, plus hopefully some aggressive actions at SHLD, will lead to a nice short squeeze.  Cheers!

 

Sanjeev,

 

What caused you to change your mind on Sears? Faster monetization of the real estate and faster closing of stores? I thought at one point you thought is was a sucker's bet even at around $30 since Sears is not a value retaileer, like Wal-Mart or Target and is not experiential like a Macy's or Apple.

I

[Parsad]

Sanjeev,

 

What caused you to change your mind on Sears? Faster monetization of the real estate and faster closing of stores?

 

Yup, especially when details of Seritage Realty Trust started to come out, and they announced the redevelopment plan of the store and property here in Burnaby.  I realized Eddie was getting serious about liquidating or monetizing the real estate when you started to see these core properties in the news. 

 

I don't care about the retail business...they are a dying model that just keeps eating cash, but as long as he can get them to breakeven, we're good.  But if they moved fast enough to monetize the other assets, and then redeploy those assets, then you've got the possibility of making this investment work.  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!   

[alertmeipp]

I just wish Sandridge has this 40% run soon as well.

[Luke 532]

Eddie has over $1B in his coffers that he freed up last quarter with the full liquidation of Capital One, Genworth, IStar, and Orchard, and the partial liquidations of AutoNation (liquidated 36% of his stake), GAP (26%), and SHOS (36%).

 

Excluding SHLD, Lampert sold 44% of all shares that ESL owned in other companies... in one quarter.

Shares Q1: 64,747,254

Shares Q2: 36,418,437

Change: 44% drop

 

The $1B does not include any redemptions that he might need to meet (I'm not well-versed on ESL's lock-up period and when investors can get out; I believe it's 5 years but I don't know if it's rolling or not).

 

Guess who has been selling AutoNation the past few days to the tune of 1.8M shares?

 

http://www.sec.gov/Archives/edgar/data/350698/000118143113048322/xslF345X03/rrd390071.xml

[alertmeipp]

Eddie has over $1B in his coffers that he freed up last quarter with the full liquidation of Capital One, Genworth, IStar, and Orchard, and the partial liquidations of AutoNation (liquidated 36% of his stake), GAP (26%), and SHOS (36%).

 

Excluding SHLD, Lampert sold 44% of all shares that ESL owned in other companies... in one quarter.

Shares Q1: 64,747,254

Shares Q2: 36,418,437

Change: 44% drop

 

The $1B does not include any redemptions that he might need to meet (I'm not well-versed on ESL's lock-up period and when investors can get out; I believe it's 5 years but I don't know if it's rolling or not).

 

Guess who has been selling AutoNation shares the past few days?

 

http://www.sec.gov/Archives/edgar/data/350698/000118143113048322/xslF345X03/rrd390071.xml

 

Oh mine...

[merkhet]

I sent the following to a friend last night:

 

"If you look at his holdings -- Autonation is above where he was selling it last quarter & The Gap is around the same levels -- if he was intent on selling down his holdings, he'd probably be happy to do so at these prices. It'd be great to see him reduced down to just Sears (and/or Sears Hometown). That would surely send shorts scrambling."

 

Awesome.

[OracleofCarolina]

yup, up another 4% in after hours

[alertmeipp]

looks like my 60 covered call isn't such an good ideal after all.

[meiroy]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

 

I guess it's a matter of incentives, their incentive seems to be to see the price drop so they could increase their share.

 

[meiroy]

Sanjeev,

 

What caused you to change your mind on Sears? Faster monetization of the real estate and faster closing of stores?

 

Yup, especially when details of Seritage Realty Trust started to come out, and they announced the redevelopment plan of the store and property here in Burnaby.  I realized Eddie was getting serious about liquidating or monetizing the real estate when you started to see these core properties in the news. 

 

I don't care about the retail business...they are a dying model that just keeps eating cash, but as long as he can get them to breakeven, we're good.  But if they moved fast enough to monetize the other assets, and then redeploy those assets, then you've got the possibility of making this investment work.  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! 

 

Sanjeev, another question if I may.

 

What happens to options when there is a sharp quick short squeeze? For example, the underlying goes to 1000 within ONE day.  Would the market makers follow-up with the intrinsic value in the options? Would there actually be a market to buy or sell deep in the money? If there is no such market, what would be a good strategy to realize profit? Thanks. #fantasyoptionsplayproblemfortherichandfamous

[Myth465]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

 

I guess it's a matter of incentives, their incentive seems to be to see the price drop so they could increase their share.

 

Which is my point, not very partner like....

We now see action on the plan that most had hoped for.

 

We also have an up to date valuation performed by a fairly good investor.

Will be interesting to watch what happens.

[Myth465]

Thats a great presentation by Baker St.

If only Management bothered to present similar data to shareholders so they could make an informed decision....

 

I would take a management team that creates value over one that spells it out any day of the week.  There have been times when both Fairfax and Berkshire (along with ELF, LUK and a number of others) haven't spelled it out and it has been a great opportunity for long term investors to do their work and take a position at a good price.  I would imagine Mr. Lampert is perfectly happy with his shareholder base.

 

I would prefer a partner, and you are acting like someone cant create value while telling you how he is doing it, cause I mean you do own the business too.....

But we take what we can get sometimes. You guys act as if what I am asking for is hard to give.

 

But yes you are right. Lampert is happy he could buy shares on the cheap due to putting up horrible earnings and not explaining where the company was going. Who wouldnt be happy with that. A Partner who hides information from his partner and buys him out on the cheap would be very happy, would it be fair or right?

 

I agree, he is happy he and people with the resources to commission these sorts of studies own more shares.

 

[T-bone1]

I think it is a stretch to say he is hiding information.  Either way, we clearly have a different definition on what a good partner is.  I consider anyone who creates value and doesn't take advantage of me to be a good partner (at least not by sins of commission).  I don't think management needs to help me value the company - and by corollary try to get the stock price to always trade at fair value.

 

I prefer to buy things cheap, and non-promotional management teams (bordering on secretive) occasionally help allow me to buy good businesses on the cheap. 

 

A lot of people on here have occasionally criticized Prem, Buffett and others for not being good partners - personally I'm willing to settle for a partner that is better than everyone else.

 

I would also note that things haven't always gone as planned for Lampert at Sears.  It would be a little much to expect him to be pounding the table on value when he is just getting over major challenges (like Prem in 2006).

 

I don't mean to be argumentative at all and I hope this doesn't come of that way, but can you name a management team that lives up to your criteria?  Other teams (CHK comes to mind) have been roundly criticized for providing a lot of information to help investors value the company.  I would rather invest with non-promotional management teams who own the same shares I do, don't overpay themselves, and over deliver over time

 

 

[Myth465]

I like Buffett's definition as it relates to stock buy backs.

 

I am not so much focused on valuation, but more so on strategic direction and game plan.

 

No one is saying he should say Sears is worth $80, and here is a spreadsheet, I am saying there are several hundred pages hypothesizing whats been going on at Sears over the last few years, and that shouldnt happen if you have honest and open management.

 

This guy has literally hired an entire RE team, and combed linked in to find all of this data out. Why cant Management give you the message is all I am saying.

No so much the dollars as it relates to assets, but more what the plan is for the assets.

 

Contrast that with the guy running AIG, or many other top notch Management teams. As I have said time and time again, you will probably make money with Lampert, but I dont like the way he runs the company. I am not treated as a partner / shareholder.

[T-bone1]

I like Buffett's definition as it relates to stock buy backs.

 

I am not so much focused on valuation, but more so on strategic direction and game plan.

 

No one is saying he should say Sears is worth $80, and here is a spreadsheet, I am saying there are several hundred pages hypothesizing whats been going on at Sears over the last few years, and that shouldnt happen if you have honest and open management.

 

This guy has literally hired an entire RE team, and combed linked in to find all of this data out. Why cant Management give you the message is all I am saying.

No so much the dollars as it relates to assets, but more what the plan is for the assets.

 

Contrast that with the guy running AIG, or many other top notch Management teams. As I have said time and time again, you will probably make money with Lampert, but I dont like the way he runs the company. I am not treated as a partner / shareholder.

 

I think this is a special case to some extent because he is running a retailer with hundreds of thousands of employees and a lot more customers.  Don't you think it might destroy some of that value through reputation and morale if he advertised that he was unloading real estate and possibly (through SHOS, seritage, shop your way, ect.) preparing to downsize the retailer significantly after Christmas?

[Myth465]

You bring up a good point.

I think Lampert even considered that.

 

I figured they would sell / lease top quality space, but they are putting in smaller Sears in some spaces and retaining employees and staff.

Smaller, quicker, more profitable retail which at least breaks even. Plus a profitable asset business. Its a great and easy sale to the employees and investors. I am pretty sure moral with the current strategy cant be very high...

[Luke 532]

A Partner who hides information from his partner and buys him out on the cheap would be very happy, would it be fair or right?

 

All of the information in Baker Street's report is public information.  Lampert doesn't spell it out, but he doesn't hide what is needed to make a determination of what his intentions might be.  I think his intentions have been pretty clear, especially with the events taking place of the past 12 months.