When Kmart acquired Sears (SHLD) in 2005, Chairman Edward Lampert said the new company would have the geographic reach and scale to compete with Wal-Mart Stores Inc. The billionaire hedge fund manager has since presided over 18 consecutive quarters of declining sales. He’s on his fourth chief executive. While Sears Holdings Corp. shares soared in the first few months after the merger, they’ve fallen 55 percent in 2011 alone. Since becoming chairman in 2005, Lampert, 49, has reduced costs, closing 171 large U.S. stores and cutting the headcount by about 12 percent. Sears employed 312,000 people as of January, down from 355,000 in June 2006, according to data compiled by Bloomberg. Meanwhile, his hedge funds have made money on the original investment.Investors: The Only Thing to We Have to Fear Is Sears Itself (WSJ)
Running a retail chain is a lot like running a corner restaurant: A lot of people think they can do it well, but few can. In response to the sales miss, the company said it will close 100 to 120 of its Sears and Kmart stores, will focus on "better inventory management and more targeted pricing and promotion," and will cut costs. That simply isn't enough. Given the depth of the company's problems, Eddie Lampert—the hedge fund billionaire who engineered Sears' merger with Kmart in 2005 and who controls the company—needs to rethink how the company should be run and then get out of the way.Scene 2011: Dimon, Mack, Krawcheck, Paulson, Paltrow, Bundchen (Bloomberg)
Scene Last Night met a lot of people at a lot of parties in 2011. Here are some of the personalities that entertained, intrigued and taught us something about giving back. These famous men include Sallie Krawcheck, John Paulson, John Mack, Jamie Dimon, Evelyn Lauder, Paul Tudor Jones, Gary Cohn, Marcus Samuelsson, Gwyneth Paltrow, Gisele Bundchen.Gold Left Some Investors In The Dust (WSJ)
Gold has been among the best investments in 2011, but shares of gold miners are among the worst. Gold is up 12% this year but shares of gold miners have fallen almost 16%. Smaller gold miners are down almost 40%, based on the returns of leading exchange-traded funds tracking those stocks. The surprising gulf has caused pain for some of the biggest names on Wall Street—including John Paulson, George Soros, David Einhorn, Seth Klarman and Thomas Kaplan—many of whom piled into gold shares over the past year, sometimes by shifting away from gold itself.Hedge-Fund Millionaire Diggle To Offer Farms, Introduce Life Sciences Fund (Bloomberg)
Stephen Diggle, who co-founded a hedge fund that made $2.7 billion in 2007 and 2008, plans to open his personal farmland portfolio to investors and start a fund that will trade life-sciences companies. Diggle will transfer the farm assets from his family office to Singapore-based Vulpes Investment Management, which he set up in April after liquidating his previous firm’s volatility (VIX) funds. Diggle’s family also holds “significant stakes” in life sciences, including biotechnology companies, which will be moved to a fund he plans to set up next year, the 47-year-old said. “Everything that we are investing in personally is available to investors,” Diggle said in an interview. “We have got capital committed, we are focused on a number of things where we think there’s a compelling opportunity to make money.”Hedge Funds And Other Financial Firms Looking To Buy MF Global Customers' Bankruptcy Claims (New York Post)
Wall Street’s vultures are swooping in with offers to buy bankruptcy claims held by MF’s brokerage customers. A slew of hedge funds, banks and other financial firms, including Longacre Fund Management, Elliott Management, Triax Capital Advisors and Contrarian Capital, have started contacting MF customers with offers to buy their claims for cash — but at a discount to their face value, The Post has learned. Commonly referred to as “vulture investors” because they seek to profit off distressed situations like bankruptcies, these shops are seeking to buy the rights to money owed to MF customers in the aftermath of the firm’s Halloween bankruptcy.