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Sears Holdings (SHLD) looks set to double to hit $100 a share, according to Barron's. The bull...
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Saturday, August 11, 2012, 11:15 AM ETSears Holdings (SHLD) looks set to double to hit $100 a share, according to Barron's. The bull thesis is that the stock is now a trimmed-down real estate play with attractive brands such as Kenmore and Craftsman to boot. As the sly Eddie Lampert crafts a slow-motion liquidation, throw earnings valuations out the window and crunch the numbers on a sum of the parts. The Catch-22 for a Sears rally: Those pesky shorts and an underfunded pension plan.
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This news story has 32 comments:
Always good parking and a great short cut into the mall.
Craftsman tools is not going to save sears even as many as I buy, and there a lot of appliance stores out there. Sears used to be a great store.
As far as $40.00 shoppers at Macy’s, have you priced their shirts lately. I think not. Macy’s has a much better clothing selection than the K-mart brands Sears carries.
A bunch, is that like a whole-bunch? How many is a bunch?
Is their “bunch” sitting on old rundown lots, in old rundown neighbor hoods?
Which word in (What property?) did you not understand? (Simon Properties “owns” the Mall properties!) So file…that!
Approximately 95,000,000sf of Owned RE
And
Approximately 180,000,000sf of Leased RE
Now put some bearish numbers to that amount of square footage and the value gets rather large quickly. Since I have ownership in centers where I deal with Sears as a tenant, I am in a position to know more than a day trader with no commercial real estate experience, but it really isn't that hard to put some value on the owned real estate.
What is slightly trickier is realizing that the leased RE also has a large value. You see the anchor tenant in a shopping center or mall has a lot of leverage with the landlords of the center. In a strip center, most all of the other leases have clauses that allow them to close if the anchor tenant goes dark so obviously landlords are at the mercy of their anchor tenants. Many of Sears leases are under 20% of the current market rates and are locked in for 20-60 more years, often with little to no future increases. Landlords would love to buy them out of these leases but Sears is reluctant to sell (we have approached them on several properties including underperforming stores).
Try $45psf on the owned and $10psf on the leased. Produces a value around $57/share and this is bearish pricing.
The sale that included Ala Mona confirms this analysis:
Ala Mona - leased - 340,00sf - $661psf - $225,000,000
The other 4 leases sold - 146,000sf @ $10psf = $5,840,000
The 6 owned stores in the sale - 146,000sf @ $45psf = $39,420,000
=$270mm disclosed sales price
Keep in mind that this assumes there are no other high value stores that would be somewhere between the price of Ala Mona ($661psf) and the Coralville, IA ($45psf) store in the sale referenced above. For instance the Santa Monica owned store would bring a very high value along with similar other locations in the most expensive zip codes in the country.
Cheers.
Don't buy, walk away, short the stock, do anything but buy the stock. I will hold and continue to add to my shares. Sears HOLDINGS will double and double again...
Cash: $750 million
Inventory: $8.8 Billion
Brands: Kenmore, Craftsman, Die Hard, Lands End (to name a few)
Online: Top 10 online retailer (usually ranked around 5 or 6 during the holidays)
Service: Number one in-house service provider in the US. Over 10 million service calls annually.
Hometown/Outlet Stores: Valued @ $500 million plus at the beginning of the year
Shop your Way Rewards : Tens of millions of members
Real Estate: over 3900 stores with a supporting network of distribution hubs in the US and Canada
Real Estate is obviously the biggest asset and one of the most controversial as far as its value. 11 stores were sold to General Growth at the beginning of the year which netted $270 million. One store was the crown jewel of this transaction, but if you start to do the math on over 3900 stores, you have one of the largest REIT/ property managers in the country.
This is the majority of assets but I am sure I missed something.
Another sweet jewel in the crown.
Another sub $30 shakeout like late last year would be awesome at this point.
This "story" has been told before. SHLD has destroyed more wealth for people over the past few years.
Sears was great once, when I was in elementary school in the early 70's. That was a long time ago.
They must be running out of things to talk about over at Barron's. It must be getting that time to put Abby Joseph Cohen on the cover so she can tell everyone how great the world is. Yikes. No thanks.
It is shocking how little attention is paid to the ASSETS and how they are carried on the books at corporate.
Of course, this ignorance of the true value of the holdings allows those in the know to accumulate more of these heavily shorted shares.
If, somehow SHLD falls into the 20s or even 30s again you are gonna want to buy as many shares as you can...
Trust me.
As far as their pension fund - news came out weeks ago that Sears over estimated their pension payment by $250 million.
The stock is going to soar this week and will settle around $100.00.
Sears Holdings will be Eddie's only investment vehicle and as Berkowitz has been saying all along SEARS HOLDINGS is a baby Berkshire Hathaway.
God Bless Us All
What charts are you looking at. I don't see that at all.
Also, the better than expected earnings will drive it up to $100.
Sears are not stand-alone stores like in the 60 & 70’s. Those failed other than in an outlet store style, and just go to one and see who’s shopping.
Good first comment…..
For this earnings there was no warning.
Lahiem