Eddie Lampert founded ESL Investments in 1988 and has become a 3.2 billion dollar man since. Lampert is also the chairman of Sears’s Board of Directors thanks to ESL’s large stake in the company. After reviewing ESL’s most recent 13F, we have found five stocks that Lampert decided to selloff entirely or reduce his stake in (check out Eddie Lampert’s newest picks).
Avon Products, Inc. (NYSE:AVP) is a beauty products company that Lampert dumped his entire stake of. Avon is down over 15% year to date after missing quarterly estimates each of the last four quarters. Sales are expected be down 1% for 2012, driven by a 2% sales decline in North America. Avon recently announced that its executive chairman would step down at the end of 2012, leaving new management to orchestrate a turnaround. The turnaround is expected to take some time, and coupled with pressures from a weak global economy, the expected earnings growth rate is a poor -13% annually. Avon is also still well above top competitor Estee Lauder at 54x earnings, compared to Estee’s 27x. Billionaire Steven Cohen, founder of SAC Capital, also sold off his entire stake of Avon last quarter (check out Steven Cohen’s top bets).
Seagate Technology PLC (NASDAQ:STX) is a data storage company focused on disk and hard drives. Although the tech company has missed two straight quarters of earnings it is still up 80% year to date. We do not see the future as so robust, with revenues expected to fall 10% in FY2013 (June) after a 36% increase in FY2012. The decline will be a result of a high adoption of tablet computers. Seagate appears cheap from a valuation standpoint at only 4x earnings, but we believe this could be a value trap as the company’s technology and fundamental product appears to be in decline, amid an ever-changing tech environment. Lampert’s sale of Seagate goes against billionaire David Einhorn, who had 8.5% of his firm’s 13F invested in the tech company (see David Einhorn’s newest picks).
CIT Group Inc. (NYSE:CIT) is the commercial lending and leasing company, with over 70% of its lending to commercial airlines, manufacturing and retail industries as of the third quarter. Due to weakness in these sectors, CIT is expected to see full year 2012 EPS down 23% year over year. We do believe that despite the near term pressure, CIT is a solid value play that investors might be overlooking. Looking at the valuation, we can see just why this is the case.