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SHLDQ - Sears Holdings Corp

alertmeipp

By alertmeipp
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tombgrt Newbie

tombgrt

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Interesting thanks. Lampert is clearly using SYW as some lean start-up. Get out a Minimum Viable Product and tweak it until you find something that sticks. "Experiments" like this could at one point get it right. In that way, Ericopoly's comments on a lousy database and failure pricing are actually quite irrelevant for the short term. Let's see whether they can develop something out of this.

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Luke 532 Newbie

Luke 532

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From the article (note: the author is not bullish on the equity):

"According to the Seritage web site, those properties control about 18 million square feet of space. Let’s assume they are redeveloped and can generate $30 per square foot, on average. That equates to $540 million of annual net operating income. If Seritage was IPO’d it could be worth about $8 billion (at a 7% cap rate). That is why Sears shareholders have a margin of safety in the stock and why it is not going bankrupt."

 

$8B is roughly $75/share.

 

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BTShine Newbie

BTShine

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So SHLD has a lease that has only two years remaining, but can sell the lease for 17M? I think there might be a term for cheap lease renewal.

 

Yeah, that would make sense.  Not likely the two years is worth $17 million.  Sears probably had a two year obligation, and a 40 year option remaining on the lease at a low rate.

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krazeenyc Newbie

krazeenyc

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So SHLD has a lease that has only two years remaining, but can sell the lease for 17M? I think there might be a term for cheap lease renewal.

 

Yeah, that would make sense.  Not likely the two years is worth $17 million.  Sears probably had a two year obligation, and a 40 year option remaining on the lease at a low rate.

 

Are you guys sure Kmart (SHLD) didn't own the property and was leasing it to Sears? And Sears has 2 years left on the lease? The article says the property was owned by kmart.

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BTShine Newbie

BTShine

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So SHLD has a lease that has only two years remaining, but can sell the lease for 17M? I think there might be a term for cheap lease renewal.

 

Yeah, that would make sense.  Not likely the two years is worth $17 million.  Sears probably had a two year obligation, and a 40 year option remaining on the lease at a low rate.

 

Are you guys sure Kmart (SHLD) didn't own the property and was leasing it to Sears? And Sears has 2 years left on the lease? The article says the property was owned by kmart.

 

That's possible.  If so, all I'm concerned with is if SHLD (owner of Sears and Kmart) took in $17 million on the sale.  Article says that $17 million was given to one of the two entities, so I'm happy as a shareholder looking to realize value.

 

 

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value-is-what-you-get Newbie

value-is-what-you-get

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. . . and from the Globe and Mail:

 

Sources familiar with the situation said the departure was sparked over differing views with parent Sears Holdings Corp., whose controlling shareholder is Edward Lampert. The disagreement was tied to “the pace at which capital was being deployed to keep the momentum of the transformation going,” according to a source.

 

 

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BTShine Newbie

BTShine

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. . . and from the Globe and Mail:

 

Sources familiar with the situation said the departure was sparked over differing views with parent Sears Holdings Corp., whose controlling shareholder is Edward Lampert. The disagreement was tied to “the pace at which capital was being deployed to keep the momentum of the transformation going,” according to a source.

 

So....if true, it implies that Mr. McDonald wanted to keep spending and Eddie felt differently?

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merkhet Newbie

merkhet

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Anyone else somewhat surprised with the short interest publication today?

 

http://www.nasdaq.com/symbol/shld/short-interest

 

Settlement Date Short Interest Avg Daily Share Volume Days To Cover

9/13/2013     15,931,810 1,985,544                 8.023902

8/30/2013         16,601,380   1,337,267                 12.414409

8/15/2013         15,739,207   935,512                     16.824164

 

Read more: http://www.nasdaq.com/symbol/shld/short-interest#ixzz2fqNcgYbY

 

EDIT: Looks like someone beat me to the punch. Attached a copy of the share price from 8/30/2013 to 09/13/2013 for reference. Surprising that it's just a net covering of 700,000 shares.

SHLD_Share_Price.png.600982f8d9b13a8089c02be94f63b766.png

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BTShine Newbie

BTShine

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Anyone else somewhat surprised with the short interest publication today?

 

http://www.nasdaq.com/symbol/shld/short-interest

 

Settlement Date Short Interest Avg Daily Share Volume Days To Cover

9/13/2013     15,931,810 1,985,544                 8.023902

8/30/2013         16,601,380   1,337,267                 12.414409

8/15/2013         15,739,207   935,512                     16.824164

 

Read more: http://www.nasdaq.com/symbol/shld/short-interest#ixzz2fqNcgYbY

 

EDIT: Looks like someone beat me to the punch. Attached a copy of the share price from 8/30/2013 to 09/13/2013 for reference. Surprising that it's just a net covering of 700,000 shares.

 

Honestly, I'm surprised.  But, I shouldn't be since SHLD never ceases to amaze. 

 

We can probably learn from some of the other heavily shorted stocks from the past year.  Tesla for example ( http://www.nasdaq.com/symbol/tsla/short-interest ).  In March of 2013 it traded around $30 and had 31 million short.  Two weeks later, the stock was around $45 and still had about 31 million short. 

 

By the end of April the short interest dropped to 28 million and the shares were up to $54. 

 

So, obviously Tesla could be called a dream example...but, we can see that only net 10% of the shorts covered (31M --> 28M) and the stock went from $30 to $54 (increase of 80% for those watching at home :)

 

Netflix had a similar experience.  End of September 2012 through end of November 2012.  Short interest 15.6M --> 14.5M.  Share Price $55 --> $80.  The short interest was essentially unchanged.  Share price did change :)

 

Cheers!

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ItsAValueTrap Newbie

ItsAValueTrap

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I'd argue that high short interest should be a bearish sign long-term.  Short sellers short stocks because they are fundamentally overvalued.

 

*In the real world:

- Sometimes there is inside information involved.

- Retail investors miss the arbitrage.  If the borrow is high and you aren't getting the interest for lending shares out, seriously think about putting on a synthetic long position through options.

- Short sellers often get squeezed.  This year has been terrible for short sellers. 

- Sometimes a short is shorted because of the arbitrage between the (convertible) bonds and the equity.  The equity isn't that overvalued.

- Sometimes short sellers are wrong.  Nobody hits every pitch they swing at.

 

 

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BTShine Newbie

BTShine

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I'd argue that high short interest should be a bearish sign long-term.  Short sellers short stocks because they are fundamentally overvalued.

 

*In the real world:

- Sometimes there is inside information involved.

- Retail investors miss the arbitrage.  If the borrow is high and you aren't getting the interest for lending shares out, seriously think about putting on a synthetic long position through options.

- Short sellers often get squeezed.  This year has been terrible for short sellers. 

- Sometimes a short is shorted because of the arbitrage between the (convertible) bonds and the equity.  The equity isn't that overvalued.

- Sometimes short sellers are wrong.  Nobody hits every pitch they swing at.

 

I'm not sure people here are saying that high short interest signals that Sears is undervalued (bullish).  The point I'm trying to make is that a short squeeze, which I think it's clear Sears experienced over the past few weeks, can occur with the short position relatively unchanged.  Most think of a squeeze occuring when the short interest shrinks, but that's not the case for SHLD at this point.

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Luke 532 Newbie

Luke 532

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SHLD short interest was still 15.9 million as of 9/13 . . . Just like with FFH, no one has covered (or being replaced by more shorts on the way up who disbelieved).  If all the buying didn't come from shorts . . . what does the float look like now?

 

http://www.nasdaq.com/symbol/shld/short-interest

 

I'm not often surprised, but I did not expect this at all.  From August 30th to September 13th, the short interest decreased just 4% (669,570 drop from 16,601,380) while the stock price surged roughly 34% (from $44 to $59; not exact stock prices).  This is fascinating.

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Luke 532 Newbie

Luke 532

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I'd argue that high short interest should be a bearish sign long-term.  Short sellers short stocks because they are fundamentally overvalued.

 

The problem is that SHLD is not fundamentally overvalued.  Those that are 100% convinced that it is overvalued, and place bets accordingly with conviction, are likely going to end up with some devastating losses.

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Luke 532 Newbie

Luke 532

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TSLA: In March of 2013 it traded around $30 and had 31 million short.  Two weeks later, the stock was around $45 and still had about 31 million short.

 

By the end of April the short interest dropped to 28 million and the shares were up to $54. 

 

TSLA is at $182 today... a 237% increase in 5 months after the initial move from $30 to $54.

 

Netflixhad a similar experience.  End of September 2012 through end of November 2012.  Short interest 15.6M --> 14.5M.  Share Price $55 --> $80.  The short interest was essentially unchanged.  Share price did change :)

 

NFLX is at $306 today... a 282% increase in 10 months after the initial move from $55 to $80.

 

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ItsAValueTrap Newbie

ItsAValueTrap

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What I find interesting is that a value investing board would spend so much time discussing the possibility of a short squeeze.

 

If you want to be like Jim Cramer and play the game where you speculate on a short squeeze, you'd do better if you work on Wall Street.  Sometimes brokers will give "colour" (I guess it's color because they're American) on the lending situation for a stock.  The whole Chinese wall thing isn't always respected (brokers aren't supposed to do it but they do).  So then eventually some devious hedge funds will figure out if somebody has too much of a short position in a particular stock.  Then they all buy the stock to drive the price up... creating the squeeze.  And some of them will make sure that their shares can't be lent out... causing buy-ins.  :o

Jim Cramer was the victim of this early on in his career.  Then he learned how to do it and started doing it to other people.

 

That game is very different than value investing.

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