Edward S. Lampert is chairman of Sears Holdings Corporation (SHLD) and founder, chairman and CEO of ESL Investments. He's a couple of years shy of 50 and has an undergrad degree from Yale. Lampert is also an ex-Goldman Sachs analyst, like Farallon’s Thomas Steyer. He started Connecticut-based ESL Investments in 1988 with $28 million. According to Forbes, he is ranked 316th on the list of the world’s richest people, with an estimated net worth of $3 billion.
A story in Fortune on February 6, 2006, titled “Eddie Lampert: The best of his generation," said the following: "His hedge fund, ESL Investments, has delivered average annual returns of nearly 30%, after fees, since its 1988 launch, according to several of its investors, who include Dell founder Michael Dell, media mogul David Geffen, and the Tisch family. Geffen, who gave Lampert $200 million to invest in 1992 (when Lampert was just 29), says that had he not periodically taken money out for diversification, he would have $9 billion today. As it is, says Geffen, 'I've made more money from Eddie than from all the businesses I've created and sold.'"
Lampert makes concentrated bets and holds them for many years. Some of his biggest investments in the 1990s were IBM (IBM) and American Express (AXP) .Currently his long-term investments are Sears Holdings Corp., AutoNation (AN) and AutoZone (AZO).
RBS Partners, an affiliate of Edward Lampert's ESL Investments, disclosed on its last F13 filing that it owned $8.44 billion in value as of September 30, 2010. Early last year Lampert had investments in Acxiom Corp (ACXM) and SLM Corporation (SLM). However, he sold his holdings during the second quarter. Axciom returned 17.3% and SLM gained 44.7% since then. Considering SPY’s 26% return, his timing wasn’t great in selling these stocks.
In the third quarter of 2010 Eddie Lampert didn't add any new stocks to his portfolio. Below are Lampert’s other positions at the end of September 2010:
1) Sears Holdings Corp.: Lampert had $3.47 billion of SHLD shares as of September 30th 2010. SHLD gained 6.2%, underperforming SPY’s 13.3% return, since the end of September. During the third quarter Lampert kept his SHLD holdings constrant. Tiger Global’s Chase Coleman has some SHLD shares in his hedge fund too.
2) AutoZone Inc.: Lampert had almost $2.87 billion of AutoZone shares at the end of September. AutoZone gained 10.8% since then. Even though the stock underperformed the market recently, it returned nearly 120% during the past four years. This underlines Lampert’s talent in picking long term winners. Cantillon sold Autozone during the last quarter of 2010.
3) AutoNation, Inc.: AutoNation returned 23.5% since the end of September. Lampert’s $1.45 billion gained nearly $350 million. AN is one of the 20 stocks Wall Street analysts expect to fall the most.
4) Capital One Financial Corp. (COF): Lampert had almost $280 million of COF shares at the end of September. Lampert initially bought COF during the third quarter of 2008 at an average cost of $41.68. He didn’t start reducing his shares until the first quarter of 2010. He reduced his holding by 5% during the first quarter and 20% in the second quarter. The stock currently trades at $49.86, and managed to beat the SPY’s 16.2% return since September 2008. John Paulson also has a $650 million position in Capital One Financial (COF).
5) CIT Group, Inc. (CIT): Lampert had 3.6 million CIT shares at the end of September. CIT gained 18.4% since then, outperforming the SPY by 5.1 percentage points. Daniel Loeb, Whitney Tilson, David Einhorn and John Paulson also have CIT shares in their portfolios.
6- Genworth Financial, Inc. (GNW): Lampert increased his GNW holdings by nearly 20% during the third quarter. He initially added GNW to his portfolio at the end of 2008, when the stock went down to $1 from $15. Later Lampert added to his position as the stock price was hovering between $1 and $7. Currently GNW trades at $13.94.
7- Citigroup Inc. (C) : RBS Partners had $86 million worth of C shares at the end of September. This is another stock with 20%+ returns during the past four months. C gained 25.3% in four months, beating the SPY by 12 percentage points. C was one of the 7 stocks insiders were buying like crazy in November.
Unfortunately, Lampert's average weighted return over the past four months was 11.9%, vs. SPY’s 13.3%. This is mainly because of SHLD’s poor performance. The media was touting Lampert as the next Warren Buffett a few years ago. They're not saying that anymore.