SHLDQ - Sears Holdings Corp

[merkhet]

 

 

Yea, it's unclear how many of the dozen stores referenced are in the U.S. versus Canada. I was doing a thing I used to do for proofs in my mathematics classes. Assume the extreme and show how that affects the analysis. Assuming all of them are in the U.S. (or all but one), then what does that mean?

 

 

That means Riefs is a liar as he said <2% of the ~300 US stores (6 or less).  ;)

 

 

Clearly! :P

[Luke 532]

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

 

August 30th: 16.6M shares short, share price $42.50 (avg of high and low for day)

September 13th: 15.9M short, share price $59.25

September 30th: 13.7M short, share price $59.00

 

Roughly a 39% increase in stock price from August 30th to September 30th, compared to a 17% decrease in shares short for the same time period.  About 2M shares covered the last 2 weeks of September, but we've still got nearly 14M shares short.

 

The question is, who the heck was buying it from $42.50 up to $59.25 the first two weeks of September?

[merkhet]

Short interest as of September 30, 2013 is now 13,710,928 versus 15,931,810 as of September 13, 2013.

 

Accusation that I'm not a value investor because I look at this stuff in 5... 4... 3... 2...

 

EDIT: Luke beat me to the punch.

[BTShine]

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

 

August 30th: 16.6M shares short, share price $42.50 (avg of high and low for day)

September 13th: 15.9M short, share price $59.25

September 30th: 13.7M short, share price $59.00

 

Roughly a 39% increase in stock price from August 30th to September 30th, compared to a 17% decrease in shares short for the same time period.  About 2M shares covered the last 2 weeks of September, but we've still got nearly 14M shares short.

 

The question is, who the heck was buying it from $42.50 up to $59.25 the first two weeks of September?

 

Is it possible that Bruce Berkowitz added 1 or 2 million to his holdings in September?  Or, would he have been required to update his holdings with an SEC filing?

[merkhet]

BTShine, I think we'll have to wait for the 13F to see if Fairholme has added shares.

[TwoCitiesCapital]

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

 

August 30th: 16.6M shares short, share price $42.50 (avg of high and low for day)

September 13th: 15.9M short, share price $59.25

September 30th: 13.7M short, share price $59.00

 

Roughly a 39% increase in stock price from August 30th to September 30th, compared to a 17% decrease in shares short for the same time period.  About 2M shares covered the last 2 weeks of September, but we've still got nearly 14M shares short.

 

The question is, who the heck was buying it from $42.50 up to $59.25 the first two weeks of September?

 

It could be shorts. You can't look at gross short interest numbers and assume its the same holders. One person who was short could have covered at a higher price from another person selling short. It's possible that you have a short squeeze where short exposure rolls to a different set of individuals while the short interest remains unchanged. You just have a whole bunch of new people who are short at higher levels.

 

Short interest as of September 30, 2013 is now 13,710,928 versus 15,931,810 as of September 13, 2013.

 

Accusation that I'm not a value investor because I look at this stuff in 5... 4... 3... 2...

 

EDIT: Luke beat me to the punch.

 

It's not value investing to watch short interest and make investment decisions with short interest as a catalyst. It's speculation. That doesn't mean you're not a value investor - just means that you're one who has a speculative thesis for a short term catalyst in the stock price. Nothing wrong with that and nothing wrong with being right and profiting heavily from it! (Congrats btw!) the value investing is the the real estate thesis for the long term holders. Just call it what it is ;)

[Luke 532]

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

 

August 30th: 16.6M shares short, share price $42.50 (avg of high and low for day)

September 13th: 15.9M short, share price $59.25

September 30th: 13.7M short, share price $59.00

 

Roughly a 39% increase in stock price from August 30th to September 30th, compared to a 17% decrease in shares short for the same time period.  About 2M shares covered the last 2 weeks of September, but we've still got nearly 14M shares short.

 

The question is, who the heck was buying it from $42.50 up to $59.25 the first two weeks of September?

 

It could be shorts. You can't look at gross short interest numbers and assume its the same holders. One person who was short could have covered at a higher price from another person selling short. It's possible that you have a short squeeze where short exposure rolls to a different set of individuals while the short interest remains unchanged. You just have a whole bunch of new people who are short at higher levels.

 

I don't assume it's the same people, actually I'd be surprised if it was although some people may have re-shorted.  But the point I was trying to make is that if the short interest was relatively unchanged from $42.50 to $59.00 then that indicates either new longs entered SHLD, existing longs added to their positions, or shorts initiating positions that are underwater.  The beauty of it is that if the stock price drops back to the low-$40's then that might be a move driven by more aggressive shorts and we could be looking at an ultra-cheap stock at $40 with short interest near 20,000,000 shares. 

 

Bottom-line is that a much higher stock price with similar short interest as a percentage of float is recipe for a stronger squeeze.  Just study FFH and others to see what I'm getting at.  I would back-up-the-truck with OTM calls if the $40 stock/20M short scenario were to take place.

[krazeenyc]

If the stock drops to the 40s, I don't think the cost of the calls will nearly be as wonderfully cheap as they were post earnings.

[Luke 532]

If the stock drops to the 40s, I don't think the cost of the calls will nearly be as wonderfully cheap as they were post earnings.

 

Agreed, those 2015 $90's for $0.70 were insane.  Although the shorter time to expiration will play a factor.  Also, 2016's due out in November. 

[merkhet]

 

Short interest as of September 30, 2013 is now 13,710,928 versus 15,931,810 as of September 13, 2013.

 

Accusation that I'm not a value investor because I look at this stuff in 5... 4... 3... 2...

 

EDIT: Luke beat me to the punch.

 

 

It's not value investing to watch short interest and make investment decisions with short interest as a catalyst. It's speculation. That doesn't mean you're not a value investor - just means that you're one who has a speculative thesis for a short term catalyst in the stock price. Nothing wrong with that and nothing wrong with being right and profiting heavily from it! (Congrats btw!) the value investing is the the real estate thesis for the long term holders. Just call it what it is ;)

 

 

See, this is what I don't understand. Why do people seem to correlate watching the short interest with making decisions because of the short interest?

 

I define value investing as the real estate as well, but I don't define tracking the short interest as "not value investing." It's merely a catalyst. Most catalysts are probabilistic in nature. The short interest may act as a catalyst or it may not. Increased sales may show operating leverage at GM or they may not (either because the sales don't materialize or the operating leverage doesn't materialize.)  Just because something is probabilistic does not mean that it is speculative.

 

Am I missing something here? This seems to be popping up a lot.

[phil_Buffett]

i bought more today after the drop in share price

[tng]

I've been the king of bad timing this year, mainly due to trading restrictions that my employer requires. Brought MBIA before the settlement and watched my position go up 70%+, and then watched almost all my profits evaporate. Now that I can sell, I am actually considering buying more instead. The same thing is happening with SHLD now. I brought at $40 and watched it go up to $65. Couldn't get cleared to sell any of it and now I am watching it dwindle away again. I can trade SHLD next week, but I might be buying instead of selling.

[BTShine]

FWIW - Went to Kmart last night to check on the new Adam Levine and Nicki Minaj lines.  Both had people in their area shopping for clothes.  There were three teenage guys shopping in the Adam Levine section, and a bunch of the T-shirts for his line were sold out.  Not many shoppers in any of the other clothing areas of Kmart.  I saw this as a good sign for the popularity of Adam and Nicki's lines.

[krazeenyc]

I've been the king of bad timing this year, mainly due to trading restrictions that my employer requires. Brought MBIA before the settlement and watched my position go up 70%+, and then watched almost all my profits evaporate. Now that I can sell, I am actually considering buying more instead. The same thing is happening with SHLD now. I brought at $40 and watched it go up to $65. Couldn't get cleared to sell any of it and now I am watching it dwindle away again. I can trade SHLD next week, but I might be buying instead of selling.

 

Assuming you couldn't sell MBIA -- does your work let you buy puts directly? If not, can you indirectly hedge by buying puts on AGO or something similar? SHLD obviously has nothing really you can hedge with other than SHLD puts.

[tng]

I've been the king of bad timing this year, mainly due to trading restrictions that my employer requires. Brought MBIA before the settlement and watched my position go up 70%+, and then watched almost all my profits evaporate. Now that I can sell, I am actually considering buying more instead. The same thing is happening with SHLD now. I brought at $40 and watched it go up to $65. Couldn't get cleared to sell any of it and now I am watching it dwindle away again. I can trade SHLD next week, but I might be buying instead of selling.

 

Assuming you couldn't sell MBIA -- does your work let you buy puts directly? If not, can you indirectly hedge by buying puts on AGO or something similar? SHLD obviously has nothing really you can hedge with other than SHLD puts.

 

Nope, I can't directly reverse a position by selling or hedging with options or derivatives on the underlying company or other securities on the same company. I could have hedged MBIA by buying puts on AGO, that would have been legal, but I didn't think of it at the time. I'll have to keep that strategy in mind for future investments.

[JAllen]

Interactive Brokers is increasing the margin requirements for SHLD and some other stocks that have rapidly increased in price.  Not sure if this is targeted towards the short-sellers, long-owners or both....

 

 

http://ibkb.interactivebrokers.com/node/2113

[Luke 532]

http://www.myfoxmemphis.com/story/23613696/sears-crosstown-project-facing-major-snag

 

The video is a Memphis news segment.

 

Update on the Crosstown (Memphis) development: http://www.commercialappeal.com/news/2013/oct/10/sears-crosstown-project-receives-20-year-tax/?CID=happeningnow

 

Excerpt: "The Center City Revenue Finance Corp. approved a 20-year tax freeze Thursday for the $180 million redevelopment of the Sears Crosstown building after seeing it would create more than 3,000 construction and permanent jobs and generate a $330 million economic impact."

[krazeenyc]

http://www.myfoxmemphis.com/story/23613696/sears-crosstown-project-facing-major-snag

 

The video is a Memphis news segment.

 

Update on the Crosstown (Memphis) development: http://www.commercialappeal.com/news/2013/oct/10/sears-crosstown-project-receives-20-year-tax/?CID=happeningnow

 

Excerpt: "The Center City Revenue Finance Corp. approved a 20-year tax freeze Thursday for the $180 million redevelopment of the Sears Crosstown building after seeing it would create more than 3,000 construction and permanent jobs and generate a $330 million economic impact."

 

Does Sears actually still own this one?

[constructive]

Asked and answered.

 

Luke, this project that you posted is quite interesting. Do you know if SHLD owns this building?

 

http://wreg.com/2013/08/01/big-plans-for-sears-crosstown-building/

175 Million is huge. I hope they can earn a decent return on it.

 

Sears vacated in the early 90s and sold it in 2000.

 

http://www.crosstownmemphis.com/sites/369/uploaded/files/Sears_Crosstown_sells.jpg

"The graffiti is fading inside and outside the buff-colored brick building, last open for business in 1993. Paint peels. Water pools from leaky roofs. Rust crawls over metal. Debris, such as paper order forms for the mail-order catalog operation, are scattered around like messy mementos."

[Luke 532]

Asked and answered.

 

Luke, this project that you posted is quite interesting. Do you know if SHLD owns this building?

 

http://wreg.com/2013/08/01/big-plans-for-sears-crosstown-building/

175 Million is huge. I hope they can earn a decent return on it.

 

Sears vacated in the early 90s and sold it in 2000.

 

http://www.crosstownmemphis.com/sites/369/uploaded/files/Sears_Crosstown_sells.jpg

"The graffiti is fading inside and outside the buff-colored brick building, last open for business in 1993. Paint peels. Water pools from leaky roofs. Rust crawls over metal. Debris, such as paper order forms for the mail-order catalog operation, are scattered around like messy mementos."

 

Not sure why I had that property listed as still under their ownership in my notes.  Thanks for the clarification.

[jeffmori7]

Asked and answered.

 

Luke, this project that you posted is quite interesting. Do you know if SHLD owns this building?

 

http://wreg.com/2013/08/01/big-plans-for-sears-crosstown-building/

175 Million is huge. I hope they can earn a decent return on it.

 

Sears vacated in the early 90s and sold it in 2000.

 

http://www.crosstownmemphis.com/sites/369/uploaded/files/Sears_Crosstown_sells.jpg

"The graffiti is fading inside and outside the buff-colored brick building, last open for business in 1993. Paint peels. Water pools from leaky roofs. Rust crawls over metal. Debris, such as paper order forms for the mail-order catalog operation, are scattered around like messy mementos."

 

Not sure why I had that property listed as still under their ownership in my notes.  Thanks for the clarification.

 

Still interesting that they keep using Sears name!

[Parsad]

Finally Eddie, finally you've woken up! 

 

http://finance.yahoo.com/news/sears-canada-names-concord-pacific-223200164.html

 

Let me explain this for those of you not familiar with Concord Pacific.  Concord has pretty much transformed Vancouver's downtown from 1986, and is currently responsible for a lot of those glass condos going up all over Toronto. 

 

As I mentioned earlier when the announcement of the Metrotown redevelopment project was announced, according to this article, my original guess of a billion dollar development was dead-on!  If Sears can do this to one property, think about all of the other core properties they can redevelop and make a killing off of over the next ten years! 

 

They are selling 50% of the land for $140M, and will not be responsible for raising the capital for the project.  They would be lucky if they made $140M net profit from that store over the next 15-20 years!  Cheers!

[Luke 532]

Finally Eddie, finally you've woken up! 

 

http://finance.yahoo.com/news/sears-canada-names-concord-pacific-223200164.html

 

Let me explain this for those of you not familiar with Concord Pacific.  Concord has pretty much transformed Vancouver's downtown from 1986, and is currently responsible for a lot of those glass condos going up all over Toronto. 

 

As I mentioned earlier when the announcement of the Metrotown redevelopment project was announced, according to this article, my original guess of a billion dollar development was dead-on!  If Sears can do this to one property, think about all of the other core properties they can redevelop and make a killing off of over the next ten years! 

 

They are selling 50% of the land for $140M, and will not be responsible for raising the capital for the project.  They would be lucky if they made $140M net profit from that store over the next 15-20 years!  Cheers!

 

Sanjeev, I'm curious how many of SHLD's properties you think might have $1B+ potential?

[Parsad]

Finally Eddie, finally you've woken up! 

 

http://finance.yahoo.com/news/sears-canada-names-concord-pacific-223200164.html

 

Let me explain this for those of you not familiar with Concord Pacific.  Concord has pretty much transformed Vancouver's downtown from 1986, and is currently responsible for a lot of those glass condos going up all over Toronto. 

 

As I mentioned earlier when the announcement of the Metrotown redevelopment project was announced, according to this article, my original guess of a billion dollar development was dead-on!  If Sears can do this to one property, think about all of the other core properties they can redevelop and make a killing off of over the next ten years! 

 

They are selling 50% of the land for $140M, and will not be responsible for raising the capital for the project.  They would be lucky if they made $140M net profit from that store over the next 15-20 years!  Cheers!

 

Sanjeev, I'm curious how many of SHLD's properties you think might have $1B+ potential?

 

Don't know.  But I can tell you that the three leased properties they sold (Vancouver, Toronto, Calgary) were Grade A location leases that were at one-third of market rates, so there is a lot of value in many of their older leased properties.  Then about four properties now, including the one in Burnaby, are each multi-tens of million dollar developments they are involved with, if not hundreds of millions like this Burnaby store. 

 

Assume that their real estate portfolio is worth $10B conservatively if sold as is...but 10% of those properties are worth 5-6 times what they are worth in redevelopment...you are now talking about real estate worth $15B conservatively if developed.  You would need to tear apart the leases and wholly-owned properties to get a good idea of fair market value and value based on redevelopment.  I'm guessing that's what attracted Lampert to Kmart and Sears in the first place.  And I'm pleased he's finally monetizing the assets!  Cheers!

[muscleman]

Finally Eddie, finally you've woken up! 

 

http://finance.yahoo.com/news/sears-canada-names-concord-pacific-223200164.html

 

Let me explain this for those of you not familiar with Concord Pacific.  Concord has pretty much transformed Vancouver's downtown from 1986, and is currently responsible for a lot of those glass condos going up all over Toronto. 

 

As I mentioned earlier when the announcement of the Metrotown redevelopment project was announced, according to this article, my original guess of a billion dollar development was dead-on!  If Sears can do this to one property, think about all of the other core properties they can redevelop and make a killing off of over the next ten years! 

 

They are selling 50% of the land for $140M, and will not be responsible for raising the capital for the project.  They would be lucky if they made $140M net profit from that store over the next 15-20 years!  Cheers!

 

Sanjeev, I'm curious how many of SHLD's properties you think might have $1B+ potential?

 

Don't know.  But I can tell you that the three leased properties they sold (Vancouver, Toronto, Calgary) were Grade A location leases that were at one-third of market rates, so there is a lot of value in many of their older leased properties.  Then about four properties now, including the one in Burnaby, are each multi-tens of million dollar developments they are involved with, if not hundreds of millions like this Burnaby store. 

 

Assume that their real estate portfolio is worth $10B conservatively if sold as is...but 10% of those properties are worth 5-6 times what they are worth in redevelopment...you are now talking about real estate worth $15B conservatively if developed.  You would need to tear apart the leases and wholly-owned properties to get a good idea of fair market value and value based on redevelopment.  I'm guessing that's what attracted Lampert to Kmart and Sears in the first place.  And I'm pleased he's finally monetizing the assets!  Cheers!

 

So what would you estimate will the cost be for redeveloping each of these $1B valuable properties?

 

Sorry my misread. "The estimated cost to fully develop and build out the project as contemplated is currently in excess of $1 billion dollars in 2013 dollars."

It is still unclear to me who is paying for this $1B cost. It seems like Concord will pay this money to build the properties, and then Sears will have 50% interest in these properties?

If similar cases can happen to all the US grade A malls that Sears owns, and assume you are correct about the 15B value, then can I assume that Sears will have 7.5B in value in these properties?