ESL Investments is a value-focused hedge fund manager founded by Edward S. Lampert in 1988. The investment firm manages several hedge funds, including RBS Partners, for high-net-worth individuals. Lampert had worked alongside reputable investor Daniel S. Och in the risk arbitrage department at Goldman Sachs before launching his own shop. ESL Investments defines itself as an aggressive conservative hedge fund and generally amasses substantial stakes in a few highly-researched companies. Sears Holdings Corporation (NASDAQ:SHLD) represents ESL’s largest holding and Mr. Lampert acts as the company’s CEO. On the second spot is Lands’ End Inc. (NASDAQ:LE), which was spun-off from Sears last year. In addition, ESL also disclosed a new position in The Gap Inc. (NYSE:GPS).
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We’ll now begin by discussing Edward Lampert’s most valuable holding, represented by Sears Holdings Corporation (NASDAQ:SHLD). ESL Investments owns 25.44 million shares of Sears as of the end of the second quarter, down by 1 million shares since the end of the previous quarter. The investment firm took control of Sears Roebuck & Company back in 2005, by merging it with Kmart, a company that was acquired out of bankruptcy by Edward Lampert. Lampert has also been the CEO of the company since January 2013, but has failed to find a solution to turn Sears around. The revenues generated by the retailer have been constantly declining, and the company has not posted a profit since 2010. Over the last year, Sears Holdings Corporation spun-off its Lands’ End subsidiary, sold the majority of its stake in Sears Canada, and made other moves that eventually increased the company’s liquidity, but failed to spur growth within its business. The other shareholders of Sears are surely disappointed with Lampert’s strategy, as the stock lost almost 27% year-to-date. Bruce Berkowitz’s Fairholme Capital Management is the largest shareholder of Sears Holdings Corporation (NASDAQ:SHLD), holding a 26.63 million shares as of the end of June.
Let’s now move on to one of Sears’ castaways, Lands’ End Inc. (NASDAQ:LE). ESL Investments has reduced its stake in the multi-channel retailer by 300,797 shares during the second quarter to 7.65 million shares valued $189.99 million as of June 30. The freshly-appointed CEO of Lands’ End, Federica Marchionni, has formulated a clear plan to revitalize the brand after the spin-off. Lands’ End has been dragged down over the last years by Sears’ sales declines and other challenges, but now the company has the opportunity to inject some dynamism in its business. Federica Marchionni has recently asserted that the company is planning to add new clothing lines, expand its current assortment of apparel, and also add accessories like shoes and handbags to its existing lines. In addition to that, Lands’ End is also planning to find new avenues of business due to the fact that Sears’ issues are not likely to end soon. International expansion might represent another source of growth for the company, considering that 84% of its sales come from the United States. Let’s not forget to mention that Lands’ End Inc. (NASDAQ:LE)’s stock has dropped by 57% since the beginning of 2015. Clint Carlson’s Carlson Capital is bullish on Lands’ End Inc. (NASDAQ:LE) and initiated a stake that contains 938,866 shares during the second quarter.
Lastly, ESL Investments added a new position in The Gap Inc. (NYSE:GPS) during the quarter. Edward Lampert’s fund reported ownership of 2.06 million shares, which are valued at $78.53 million. The company’s stock hasn’t performed way better than the other two discussed above, losing over 18% year-to-date. The Gap, which operates as an apparel retail company worldwide, has recently revealed its July and second quarter sales, posting net sales of $1.12 billion for July, compared to $1.17 billion reported a year ago. Meanwhile, the company’s net sales for the second quarter came at $3.90 billion, down from $3.98 billion reported last year. The Gap will release its quarterly earnings results on August 20, and its expects diluted earnings per share in the range of $0.51 to $0.52. From the pool of 737 hedge funds that we track, Larry Robbins’ Glenview Capital is the largest equity holder in The Gap Inc. (NYSE:GPS) with 5.99 million shares worth $228.81 million, according to its latest 13F.
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