Soap Opera at Sears

An ugly showdown at the Sears Holdings (SHLD) annual meeting between the company’s hedge fund manager-cum-CEO Eddie Lampert and rival William Ackman (who is also Sears’ fourth-largest shareholder) sent shares in the retailer 5% lower at $95.19.

Ackman is reported to have blasted Lampert in an unusual public display, taking him to task for the company’s lackluster valuation and his own poor communication skills, later telling the Chicago Tribune that he had to take his beef to the company’s annual meeting because Lampert has refused to take his calls. Who’s next to make their move in this unusual corporate showdown – Erica Kane?

Sensing the tensions roiling under the surface of this contentious company, the option market sent implied volatility 10% higher to 50.6% - indicating nearly 25% more price risk to Sears Holdings’ shares over the next 30 days than has been charted historically. Puts and calls are trading on comparable volume, with virtually all of today’s volume situated in the June contract in anticipation of its May 25 earnings release. Heavy volume was noted at the June 80 and 110 puts, and again at the 110 calls.

Rebecca Engmann Darst contributed to this report.

Comments

[JohnPseudonym]

$100 a share for Sears?

That company is on it's way to bankruptcy.

Go to any Sears or Kmart store if you need proof.

[billddrummer]

But Sears just became an authorized dealer for Electrolux appliances, and there will be talk at the annual meeting about sublicensing Sears brands, such as Craftsman and Kenmore, among others. Kenmore at Home Depot? Not so farfetched.

Surely those two events will provide strong profit and revenue growth. If you can get people into the stores.

[SamiC]

bankruptcy is not happening anytime in the near future, look at the financial statements if you need proof.

[MSF]

What on earth is Lampert doing.First it is not a retail play,than it is a retail play now it is both.
I had a complaint on a Sears store I called the main headquarters in Chicago and nobody got back to me I then called ESL and told the story to the secretary she gave me a number to call with a ladies name saying she was in charge of complaints.I left her a message saying that I got her number from Lampert's secretary,,,,,she never called me back.
What I think is Lampert was making tons of money when even my grandmother was making money in the market.He has alot of money now and he is making money off of his fees from his hedge fund and now it is difficult to make money in the market.
He has the authority to invest cash from Sears anyway he wants.....where are the returns,,,,they are not happening.Do you remember that Citi investment.....at its peak and then sold it for a massive loss.
He was buying Sears stock in the $150 area.Was he listening to that moron Cramer who said to buy it all the way up to $185,,,not to mention Cramer did not put him onhis stupid hall of shame,,,oh that's right it's his buddy pal....what is up with that.......lol.

[MSF]

WHY ON EARTH IS HE BUYING RETAIL BUSINESSES WHEN HE CAN'T EVEN RUN SEARS.
AS FAR AS THE POP IN THE EARLY DAYS OF SEARS STOCK ALOT OF SMALL INVESTORS THOUGHT THEY WERE BUYING INTO A HEDGE FUND WITH A LITTLE MONEY,THEY SAW WHAT IS HAPPENENING AND MANY OF THEM INCLUDING BIGGER INVESTORS SOLD OFF.

[MSF]

MONEY IS NOT COMING IN STRONG AND EARNINGS AND CASH ARE GOING DOWN.
THIS DOES NOT LOOK GOOD,,,,,,I'M SELLING.

[bulrun100]

Can always tell the difference between a stockholder and a stock trader.Traders whine about everything short term, stockholders look at the big picture.Mr Lampert is a long term stockholder and I'm proud to say I am too.If you don't like the direction this company is going in it only takes a few seconds to change that.Hit the sell button and stop whining!!

[fxtrader07]

@bulrun100: your approach is the right one - but I have an increasingly hard time believing that it will work on Sears. I know, alot of smart investors (value guys) have lined up and bought - but some have also sold out again. Lampert so far has failed to deliver anything positive at Sears - that is a fact! the company enters a recessionary environment in a much weaker position than it had before all this flip-flopping took place.
the business sucks and the only investment thesis here is the value of the assets and a possible turn-around engineered by lampert. Givem the past years, the latter may not happen, after all. I take a pass on this one. managing a hedge fund and running a real retail company as a ceo are two vastly different things. for me, there is tgoo much hope and too little substance in this investment story.
good luck anyway.

[businesspower]

Just a small note: since announcing recent changes in Sears structure (division into business units etc.), Lampert has greatly reduced his day-to-day management of the company (playing a role of an active CEO, as he did for the last few years). Now, the interim CEO, Bruce Johnson, heads the company reorganization process. That includes the idea of putting Sears' brands in other stores. Would it be nice to see Kenmore in Home Depot / Lowe's, or Craftsman in Auto Nation (where, by the way, ESL holds nearly 40%) and Autozone (ESL also is a single largest holder)...... And if that to happen, what are the earnings growth potential? And this growth is independent of the economy! Why? Simple: Today Kenmore appliances have the largest market share, while sold in limited number of stores (only those under Sears Holdings umbrella). If to put Kenmore appliances in 2-times the number of current stores it is sold at.......you do the math.
Apply the same logic to Craftsman; or DieHard batteries.....