SHLDQ - Sears Holdings Corp

[BTShine]

"Sears looks like a bomb shelter"

 

"Outrage" 

 

"Consumers demand and deserve more for their dollars" 

 

"It's gone viral (this story)"

 

http://video.foxbusiness.com/v/2764040239001/is-retail-really-detail/?playlist_id=933116618001

 

That clip reminds me of how TV Pundits talked when discussing BAC around $5 or $6 a share in late 2011.  You can see the thrill on their face...it's fascinating.

 

Except that people were still banking with BoA, the business had some issues, but was still intact.  This is anecdotal, but we were at the mall recently.  There are quarter rides right in front of Sears that my sons love, so each time we're at the mall we do these things.  During the time the boys rode the helicopter and robot no one walked in or out of Sears, this isn't surprising because no one was in there to start with.  Every other store had a steady flow of people in and out, even the niche stores that I'm surprised have customers.

 

Both Sears and Kmart have completely lost mindshare, how are they going to gain it back?  I know this is a real estate hedge fund transformation play, but the concern is that the dying retail sucks them dry first.  How are they going to attract customers?

 

Has anyone been in a Kmart recently?  I live in a nice area of Pittsburgh, the local Kmart has destroyed the shopping center they're at, the place is dirty, dis-sheveled, and full of empty shelves.  I was in there in the spring, went to the garden section, the shelves were empty, it looked like pictures from the Soviet Union.  Why isn't the store selling gardening items in the spring?  I have no idea. 

 

I agree with many posters that the story here is compelling, it makes fascinating reading and is fun to watch.  My concern is that the ball around Sears' ankle (the retail) is pulling it down faster than Eddie can swim and this is going to sink before Eddie & co can get to the boat.

 

Totally agree with you on some things.  Sears has lost mind share.  Kmart's are dirty, disheveled, etc.  Not many people shop at Sears (relative to other mall stores).  And, your concern is valid that the ball pulling down Sears is more that can be handled. 

 

On the other hand, there are other disheveled retailers (some with inventory problems) that make a killing...such as TJ Maxx, Ross Stores, Dollar Stores, Walmart etc.  So, having a store that looks perfect is not the only way to profits. 

 

As for my BofA reference.  They're definitely not identical situations.  But, Sears Domestic had an increase in SSS this past Quarter.  No pundit mentions that.  Shop Your Way is looking to be very popular (albeit, no proof that it's returning us to profits).  The data shows that real estate is very valuable for SHLD, and may make shareholders wealthier via redevelopment or sale. 

 

So, I do think the pendulum has swung to the extreme negative for SHLD, like it had for BAC in late 2011. 

[CorpRaider]

Which is a more bombed out post-apocolyptic zombie favorite?  Fox Business News or the Sears in Paramus NJ?

[muscleman]

"Sears looks like a bomb shelter"

 

"Outrage" 

 

"Consumers demand and deserve more for their dollars" 

 

"It's gone viral (this story)"

 

http://video.foxbusiness.com/v/2764040239001/is-retail-really-detail/?playlist_id=933116618001

 

That clip reminds me of how TV Pundits talked when discussing BAC around $5 or $6 a share in late 2011.  You can see the thrill on their face...it's fascinating.

 

This is weird. Why would this guy bash SHLD but he has no position either long or short? Why would he waste time doing that? I am feeling this is like the CS report, which may be helping clients who short SHLD to bash down the price?

[muscleman]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

[stahleyp]

Here is that guy's site.

 

http://beluscapitaladvisors.com/

 

Best Client Recommendations of 2013

$BBY Buy 5/20/13 to 9/11/13 +41.32%

$ARO Sell 7/9/13 to 9/11/13 -39.72%

$SBUX Buy 4/29/13 to 9/11/13 +22.52%

$JCP Sell 4/04/13 to 9/30/13 -40.00%

 

;D ;D ;D

 

I like how there's nothing (that I can find) about his long term performance.

 

 

[Mephistopheles]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

 

Yep, esp since retail sales haven't been looking so good for other companies. I've taken some off the table because of this and because of the sharp rise.

[Guest wellmont]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

 

history would suggest it will.

[Luke 532]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

 

Maybe.  Maybe not.  For my common shares I don't care either way what the stock does in 2013 so I'm not touching those.

 

Here is that guy's site.

 

http://beluscapitaladvisors.com/

 

Best Client Recommendations of 2013

$BBY Buy 5/20/13 to 9/11/13 +41.32%

$ARO Sell 7/9/13 to 9/11/13 -39.72%

$SBUX Buy 4/29/13 to 9/11/13 +22.52%

$JCP Sell 4/04/13 to 9/30/13 -40.00%

 

;D ;D ;D

 

I like how there's nothing (that I can find) about his long term performance.

 

Notice how it says "Best" Client Recommendations.  For all we know he could have made 100's of stock recommendations in 2013 and just listed the best on his homepage.

[muscleman]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

 

Yep, esp since retail sales haven't been looking so good for other companies. I've taken some off the table because of this and because of the sharp rise.

 

I took all of the SHLD position off the table around $61.

I am expecting the Q3 numbers to be ugly as hell like the previous two years.

 

Right now SHLD is still a puzzle to me. Perhaps I shouldn't have entered long at all at the beginning.

Other retail stocks like TXJ and ROST are going through the roof, and since Eddie almost a retail expert investor, I am curious if he has looked at TXJ and ROST and what he thought about those two companies. Why did he go all in with SHLD? I am really confused. ::)

 

 

[Luke 532]

Why did he go all in with SHLD? I am really confused. ::)

 

The real estate portfolio offers a huge margin of safety while simultaneously allowing him to create extraordinary value.  It's an apples and oranges comparison to other retailers.

[Mephistopheles]

Why did he go all in with SHLD? I am really confused. ::)

 

The real estate portfolio offers a huge margin of safety while simultaneously allowing him to create extraordinary value.  It's an apples and oranges comparison to other retailers.

 

I agree the real estate has value, but it's a question of when will it be realized for shareholders? Store closings have accelerated over the past couple of years but they still aren't at a pace that's fast enough to move the needle. It also seems now that they might have some competition on the real estate front from JCP.

 

I'm still bullish on the stock, but it's not my favorite position. Eddie and Bruce are both brilliant men, but really smart people have done really dumb things. Just look at Ron Johnson and Bill Ackman. Not saying this is the case with Lampert/Berkowitz, but it is something to think about.

 

Edit: What I find fascinating about Ron Johnson in the whole JCP debacle is that he gave up AAPL stock options and purchased $50 million worth of at the money warrants for JCP (strike of $30, expiring 7.5 years after purchase) with cash from his own pocket. So his incentives were very much aligned with shareholders.

[tombgrt]

Does anyone feel like the Q3 report due on Nov. 11th would again bomb the stock?

 

What would happen after a 20-30% or more stock decline where almost all float is held short when you also have LT holders buying more? Covering could get really hard when the stock stabelizes.

[Kraven]

I just heard an old Billy Joel song ("Scenes From an Italian Restaurant") that I had completely forgotten the lyrics to.  Here they are in part:

 

Brenda and Eddie were still going steady in the summer of '75

When they decided the marriage would be at the end of July

Everyone said they were crazy

"Brenda you know that you're much too lazy

and Eddie could never afford to live that kind of life."

Oh, but there we were wavin' Brenda and Eddie goodbye.

Oh, oh, oh

Well they got an apartment with deep pile carpets

And a couple of paintings from Sears

 

Coincidence?

[CorpRaider]

Some would/have asserted that ESL did take note of the TJX and Ross models; hence the formation of stand alone SHOS.

[heth247]

 

I'm still bullish on the stock, but it's not my favorite position. Eddie and Bruce are both brilliant men, but really smart people have done really dumb things. Just look at Ron Johnson and Bill Ackman. Not saying this is the case with Lampert/Berkowitz, but it is something to think about.

 

 

The difference in the way they handle JCP and Sears surely tell you who's smarter.

[Mephistopheles]

 

I'm still bullish on the stock, but it's not my favorite position. Eddie and Bruce are both brilliant men, but really smart people have done really dumb things. Just look at Ron Johnson and Bill Ackman. Not saying this is the case with Lampert/Berkowitz, but it is something to think about.

 

 

The difference in the way they handle JCP and Sears surely tell you who's smarter.

 

Of course, hence I'm long SHLD and not JCP. :) I should have made it clear in my post, but I wasn't trying to compare the 2 retailers, rather was just trying to point out that smart people do dumb things. So it's something I keep in mind whenever I think "Eddie has a great track record, and therefore sears is a good investment." I still think that more likely than not he's not being dumb.

[Guest wellmont]

Edit: What I find fascinating about Ron Johnson in the whole JCP debacle is that he gave up AAPL stock options and purchased $50 million worth of at the money warrants for JCP (strike of $30, expiring 7.5 years after purchase) with cash from his own pocket. So his incentives were very much aligned with shareholders.

 

he was also given $53m of jcp stock as signing bonus in exchange for giving up his apple stock gifts. He  was already extremely wealthy when he left apple. so he was really rolling the dice for a chance to get in the billionaires club, as he was sitting on well over $400m of net worth.

 

On October 31, 2007 Johnson exercised 700,000 stock options in Apple stock with a strike price of $23.72, and then sold the stock later that day for $185 to $185.21 apiece netting him a $112m profit. It has been reported that Johnson earned $400 million during his seven and a half years at Apple.[6]

[Luke 532]

Quick update for those interested...

 

Short (as of 10/15/2013): 13.1M

Lampert/Berkowitz/Tisch: 83M

Outstanding: 106M

Float: 23M

 

Short interest as % of float: 57% (assuming zero shares are long-term oriented of those held by Horizon Kinetics, Baker Street, Old West, Chou, and Force Capital)

Short interest as % of float: 62% (assuming 30% of shares...)

Short interest as % of float: 67% (assuming 50% of shares...)

Short interest as % of float: 77% (assuming 100% of shares...)

[tombgrt]

Too bad that it keeps dropping!

[xtreeq]

Too bad that it keeps dropping!

 

Not for those of us who want in  ;)

[tombgrt]

Too bad that it keeps dropping!

 

Not for those of us who want in  ;)

 

I was talking about the short interest. ;)

[FCharlie]

TORONTO , Oct. 29, 2013 /CNW/ - Sears Canada Inc. (SCC.TO) announced today that it will terminate its leases in respect of five stores for a total consideration of $400 million .  The agreement is definitive and only subject to customary closing conditions.  The transaction is expected to close on or around November 12, 2013 .

 

Four of the five stores are owned by The Cadillac Fairview Corporation Limited ( Cadillac Fairview ) and are located in Ontario : Toronto Eaton Centre, Sherway Gardens, Markville Shopping Centre and London-Masonville Place.  The fifth store is located at Richmond Centre in British Columbia and co-owned by Ivanhoé Cambridge and Cadillac Fairview .  The transaction requires Sears to vacate the Toronto Eaton Centre, Sherway Gardens and London - Masonville stores by February 28, 2014 and Markville and Richmond by February 28, 2015 .

 

The Company will retain the upper four full floors of the Toronto Eaton Centre to conduct its head office operations from that location.

 

[Sunrider]

So if I got the numbers right 400/1380 = 28% of the market cap just got turned into fresh cash?

 

 

TORONTO , Oct. 29, 2013 /CNW/ - Sears Canada Inc. (SCC.TO) announced today that it will terminate its leases in respect of five stores for a total consideration of $400 million .  The agreement is definitive and only subject to customary closing conditions.  The transaction is expected to close on or around November 12, 2013 .

 

Four of the five stores are owned by The Cadillac Fairview Corporation Limited ( Cadillac Fairview ) and are located in Ontario : Toronto Eaton Centre, Sherway Gardens, Markville Shopping Centre and London-Masonville Place.  The fifth store is located at Richmond Centre in British Columbia and co-owned by Ivanhoé Cambridge and Cadillac Fairview .  The transaction requires Sears to vacate the Toronto Eaton Centre, Sherway Gardens and London - Masonville stores by February 28, 2014 and Markville and Richmond by February 28, 2015 .

 

The Company will retain the upper four full floors of the Toronto Eaton Centre to conduct its head office operations from that location.

[cubsfan]

So if I got the numbers right 400/1380 = 28% of the market cap just got turned into fresh cash?

 

 

TORONTO , Oct. 29, 2013 /CNW/ - Sears Canada Inc. (SCC.TO) announced today that it will terminate its leases in respect of five stores for a total consideration of $400 million .  The agreement is definitive and only subject to customary closing conditions.  The transaction is expected to close on or around November 12, 2013 .

 

Four of the five stores are owned by The Cadillac Fairview Corporation Limited ( Cadillac Fairview ) and are located in Ontario : Toronto Eaton Centre, Sherway Gardens, Markville Shopping Centre and London-Masonville Place.  The fifth store is located at Richmond Centre in British Columbia and co-owned by Ivanhoé Cambridge and Cadillac Fairview .  The transaction requires Sears to vacate the Toronto Eaton Centre, Sherway Gardens and London - Masonville stores by February 28, 2014 and Markville and Richmond by February 28, 2015 .

 

The Company will retain the upper four full floors of the Toronto Eaton Centre to conduct its head office operations from that location.

 

I had to read it twice myself. 5 stores out of 100+. Terrific locations - especially Eaton Center. $400M!

[FCharlie]

Sears Holdings also posted an update on Q3.

 

Read it and weep.... You know... Because it's terrible... More losses, more sales declines...

 

They do call out SYWR expenses though, saying it's hurting profitability. BTShine I believe pointed out last quarter that SYWR expenses are running a quarter billion annually and are a primary reason SHLD is losing money.

 

http://searsholdings.mediaroom.com/index.php?s=16310&item=137238