Fundamental Analysis of Eddie Lampert’s New Stock Picks
Edward S. Lampert is chairman of Sears Holdings Corporation (SHLD) and founder, chairman and CEO of ESL Investments. He 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.
Lampert believes in concentrated value investing, which is basically buying assets for less than what they are worth and selling them at or close to what they are worth. Lampert makes concentrated bets and holds them for many years.
Here is the fundamental analysis of Eddie Lampert’s New Stock Picks:
CISCO SYSTEMS (CSCO): Lampert bought 6.44 million shares of Cisco Systems during the last quarter of 2010. Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry worldwide. In fiscal 2010, Cisco reported record net sales of over $40 billion, an increase of 11% compared with a year ago. Annual product sales were $32.4 billion, up 11% year-over-year. Service revenue represented 19% of annual sales or $7.6 billion, up 9% from a year ago. CISCO has 1700 customers Worldwide including 85% of Fortune 500 companies. Cisco plans to start paying a cash dividend on its common stock during fiscal 2011. Cisco is one of the battered down stocks hedge funds poured $1 Billion into during the last quarter of 2010. Bill Miller, John Burbank, David Tepper, and Leon Cooperman think CSCO is undervalued.
GAP INC DEL (GPS): Lampert bought 2.8 million shares of Gap Inc. during the last quarter of 2010. Gap Inc. is a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies. In fiscal 2010, GPS reported net sales of over $14 billion, an increase of 3.2% compared with a year ago. Annual net income were $1.2 billion, up 9.2% from a year ago. Net sales for the four-week period ended February 26, 2011, were $821 million compared with net sales of $838 million for the four-week period ended February 27, 2010.
BLOCK (H & R), INC. (HRB): Lampert bought 0.4 million shares of BLOCK (H & R) during the last quarter of 2010. H&R Block is one of the world's largest tax services providers, utilizing more than 100,000 highly trained tax professionals and having prepared more than 550 million tax returns worldwide since 1955. In fiscal 2010, HRB reported net sales of $3.8 billion, an decrease of 5.1% compared with a year ago. Annual net income was $479 million in fiscal 2010. Currently, H&R Block, Prepares 1 in every 7 U.S. tax returns and has a retail office within 5 miles of most Americans. Ray Dalio's Bridgewater Associates, Andreas Halvorsen's Viking Global, and Chase Coleman's Tiger Global are among the hedge funds that are bullish about GPS.
SEAGATE TECHNOLOGY (STX): Lampert bought 3.8 million shares of Seagate Technology during the last quarter of 2010. Seagate Technology Public Limited Company is the worldwide leader in the design, manufacturing and marketing of hard disk drives. In fiscal 2010, STX reported net sales of $11.4 billion, an increase of 15.7% compared with a year ago. Annual net income was $1.6 billion in fiscal 2010. Whitney Tilson is extremely bullish about Seagate.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.