Follow Billionaire Eddie Lampert’s Lead at Sears Holdings Corporation (SHLD)? – Target Corporation (TGT), Simon Property Group, Inc (SPG),

Page 1 of 2
ESL INVESTMENTSAfter reporting on the “hot water” that Ron Johnson is in over at J.C. Penney (reported here), how’s billionaire Eddie Lampert doing at Sears Holdings Corporation (NASDAQ:SHLD)? Well, Lampert has confidence in himself; he recently added around 1.2 million shares for $55 million to his already robust Sears position. As well, Vadim Perelman’s hedge fund, Baker Street Capital, also bought up a sizable number of shares earlier this month — some 7.18 million shares for a 6.75% ownership stake in the retailer (check out Lampert’s portfolio).
Lampert is chairman of Sears Holdings Corporation (NASDAQ:SHLD), and together with his investment firm, ESL Investments, is the largest shareholder of the retailer. Lampert owns over 25 million shares and ESL some 36 million shares, together they control 56.5% of the company. Lampert focuses on the retail sector, with other investments in notable retailers Gap, AutoZone and Big Lots, but he has been struggling with Sears of late given the poor economic back drop (check out ESL’s newest picks). So is Sears worth investing in given Lampert has increased his stake? I remain hesitant and believe there are too many headwinds afoot, including notable competition. 
Fellow fund manager Berkowitz believes
It appears that Lampert also has notable hedge fund manager Bruce Berkowitz as a backer. Berkowitz has previously discussed the value he believes that Sears Holdings Corporation (NASDAQ:SHLD)’s real estate holds (see all hedge funds owning Sears). Berkowtiz’s Fairholme Fund owns 18.1 million, or over 17% of the retailer. So why trust Berkowitz? Well he was was named “Stock Manager of the Decade” in 2009 and his Fairholme Fund has managed to to return 1.02% per month since September 2000.
Per Berkowitz’s case study of the company, he believes the real estate value alone is worth upwards of $115 per share, that’s 130% above where the stock is currently trading. He has also been sure to point out that Sears has more commercial square feet than Simon Property Group, Inc (NYSE:SPG), but Simon still manages to trade nearly ten times the market cap.
Other potential investor interest includes speculation that the commercial REIT, Vornado Realty Trust (NYSE:VNO), could be looking to trade its J.C. Penney shares it sold for a position in Sears (read more about the sale).
The Sears business
Sears Holdings Corporation (NASDAQ:SHLD)’s key segment, Sears Domestic, accounts for over 50% of Sears’ revenue. This includes its staple stores that are located in malls and average over 130,000 square feet. These stores offer a variety of products, from apparel to appliances. Kmart still generates some 35% of revenue, which is not good, as this business is seeing immense pressure from Wal-Mart Stores, Inc. (NYSE:WMT). Both segments continue to see weakness  of late. Sears’ domestic comp sales were down by 1.4% for the whole year 2012, while Kmart’s comp store sales were 3.7% lower.

Target is expected to start cutting into Wal-Mart’s market share as it focuses more on consumable items should boost sales and earnings in a sluggish consumer environment. However, I think both Wal-Mart and Target Corporation (NYSE:TGT) will continue to dominate Sears Holdings Corporation (NASDAQ:SHLD).

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!