Richard Shinnick

Sears May Not Be Berkshire, but It's Worth Buying on Weakness

You wrote:
"If the company could earn $9.00 per share again (the result for FY06), what would the stock be worth? The company was buying back stock at $131 based on expected earnings of $7-8 or so. I think the shares could eventually move into that range again, but it's hard to say for sure at this point."

This, to me, is why Sears Holding is not a buy. 2006 was for all intents and purposes the pinacle of a housing and real estate bubble that Lampert sold in to. Unfortunately, he also bought in to it as well at $131.00 per share when the stock is now trading at about 35% less, not a brillant use of capital in hindsight.

Also, what "tricks" could Lampert have up his sleeve, I read in the 10-Q about the total return swaps he invested in, but if I read it right he LOST money on those. What "tricks"? See that is the thing, everyone who promotes this stock expects this guy to pull a freaking rabbit out of his hat while at the same time comparing him to Warren Buffett. Buffett did not pull any rabbits out of his hat, he bought under-valued businesses and held them for years and years and years and he had a great advantage over Lampert, NOBODY including him knew he was "Warren Buffet" when he was 42 years-old so nobody valued his holdings with expectations of magic tricks.

Sears Holdings' True Value

Gokou3 : you are right, not much profit in the short. I wrote some simple vertical call spreads, limited upside and downside and am just looking for SHLD to stay below $95 through February. Beyond that we will just have to see where the economy goes, it is still a retailer after all.

Passerby 37: Yep, he sure is gonna be challenged on that one, so far he has spent $3billion to buy his own stock and now we have the Restoration Hardware thing. Buffett diversified... have not seen that yet.

Sears Holdings' True Value

Retail 101

I thinked you missed the point of my article and the fact that I am short SHLD, albeit a small position. I personally do not know whether "underinvestment" in its stores is the issue but the faith that people put in Lampert is a big issue because it is simply impossible for him to be the Superman that his supporters (including Cramer) wish him to be-that was the point. In other words, even being "good" is not enough for this guy to live up to the hype.

Finally, I think you are dead wrong about Cramer, he would go negative despite the personal relationship-he just might be a little slower in doing it than he should.

Thank you very much for the thoughtful comment though and I will read the article that you suggested.

Sears Holdings' True Value

Woke up this morning to see the big decline. All I can say at this point is that SHLD will have even bigger problems if Cramer goes negatvie on the stock despite his friendship with Lampert-and Cramer just might because his reputation is on the line here.

Sears Holdings' True Value

Sorry, meant to add the numbers. Here is the book values: SHLD 1.2, M 1.0, Tgt 2.6, JCP 1.9, so Sears Holding looks cheap. Macy's looks like a screaming deal?

Sears Holdings' True Value

Jud,

Book value per share is a problem I think (I think that is what you mean) as the real estate values are screwed up from what I understand (depreciation, and a basis that could have been carried forward for years). How about simple forward PE: (SHLD 15.2, M 8.2, Tgt 13.0, JCP 7.9). If you have any input on why book is an ok metric, let me know. A lot of the Lampert premium has come out of Sears Holding though.

Sears Holdings' True Value

Thank you very much for the compliment. I collaborated with my 3-year old on this one. She really wants the miniature Ducati motorcycle that they sell at Sears.

Anyway, the point that I was trying to make with Sears is that it really all just hinges on one guy. More than any other company that you might look at-even Bershire Hathaway.

Anyway, thank you again for the constructive criticism, please post a link to something that you have written so that I can have something to shoot for.

Sears Holding's Lampert Continues Great Brand Lineup

I recently checked out a couple of Sears specifically to see how things wer going, went to one tonight with my daughter (3 year old). The "urban" Sears had Kmart like Women's clothes, a spectacular appliance and tool section (expected that) and some ok kids clothes. The suburban Sears had great kids clothes, the women's clothes were not so low end and had a pretty good men's section. In fact, in both stores, employees were very helpful and very plentiful, the store looked clean which surprised me. I even saw a cardboard box that said "please reuse to save expenses" and a message came on telling all employees to tidy up and clean restrooms.

I was really impressed with the merchandise and the store overall and the thing that made the whole experience the most pleasant in both cases:

Besides the dozens of helpful employees in every corner, I WAS THE ONLY ONE THERE. To be fair, they tell me that weekends are busier.

Great merchandise + no customers = inventory issues + no profit