Chad Brand

Sears: Don't Invest For Retail Alone

Hi Steve,

A couple thoughts come to mind.

As far as finding quality investment opportunities, I am of the belief that in most markets there are always undervalued investments. Sometimes they are harded to find than others, but they are there if one is willing to look. It is true that investment assets have risen dramatically, and there are more people looking for places to put money, but even if hedge funds did not exist, that money would have been invested through more traditional vehicles. I have no reason to believe that value investing will become less and less feasible due to the growth of the hedge fund industry.

As far as whether Lampert allocates his best investment ideas to his hedge fund, or to Sears Holdings, they are essentially one and the same. Why do I say that? Lampert's hedge fund has 75% of its assets in SHLD stock. This equates to 42% of the company. Lampert's personal wealth is also tied up in the hedge fund, as is the case with many hedge fund managers. Given this is the case, he has an incentive to use SHLD as his investment vehicle of choice when he finds good opportunities. After all, his money, as well as his clients' money, is mostly invested in SHLD stock.