Sears Holdings (SHLD) moves up 3.1% premarket after shares dipped below the $40 mark for the...


Sears Holdings (SHLD) moves up 3.1% premarket after shares dipped below the $40 mark for the first time since January. Hedgeye's Keith McCullough thinks high short interest names such as Sears are scaring hedge funds in the current atmosphere. If that's the case, a short squeeze rally into year end could be on tap.

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Comments (16)
  • BHL
    , contributor
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    yeah, i guess there is a high short interest in SHLD. Although what Keith should mention is that short interest has halved in the last year or so. In Jan 2012 the SI on SHLD was ~16 mill shares and now it is ~8 mill shares. But still its 19% of float so that is pretty high...its just not astronomical like it used to be.
    7 Dec 2012, 09:31 AM Reply Like
  • MSF INVESTMENTS
    , contributor
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    Correct, it is because Lampert's business plan is working and many realize that the break up value is valued at $160.00 when you value the real estate to market.
    Also, Sears Holdings was the largest purchased stock by hedge funds last quarter.
    This is the time to get into Sears Holdings.
    7 Dec 2012, 11:43 AM Reply Like
  • MSF INVESTMENTS
    , contributor
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    Great correct information BHL but was is more interesting are the days to cover the short position in January was 5.87 days now it is at 11.11 days to cover.There are not enough shares left to cover.
    7 Dec 2012, 11:48 AM Reply Like
  • MSF INVESTMENTS
    , contributor
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    An analysts quoted also that comps are getting better for Sears.

     

    This may be beginning of the biggest squeeze in history - there are too many things falling into place.

     

    1 -Eddie Lampert is the largest and majority shareholder
    2 -Break up value at $160.00
    3 -Business plans and strategies working
    4 -Comps getting better
    5 -The largest amount of stock purchases by funds last quarter.
    6 -Short interest down almost half but not enough shares to cover.
    7 Dec 2012, 12:53 PM Reply Like
  • jasonrothman1
    , contributor
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    "This may be beginning of the biggest squeeze in history - there are too many things falling into place."

     

    What?

     

    "1 -Eddie Lampert is the largest and majority shareholder"

     

    Ever hear of Poker, where some players try to bluff their opponents into thinking they have a great hand when it’s only mediocre or nothing at all? He’s invested a lot into this hand and he’s not about to give it up yet, so he’ll stay in and keep throwing money into the pot while the other players do as well hoping they’ll fold and not call his bluff and then he’ll steal or "buy the pot” for himself.

     

    "2 -Break up value at $160.00"

     

    Everyone on Lambert's side feel there’s a lot of value in the real estate, but I would estimate at least half of that is true, if not much less. Break up value may make some investors money but mostly Lampert whose stake averages about $16 a share, and that’s why he’s in this for the long haul. I suppose if you want to be part of one of the most strategic break ups of a company in history there’s definitely money to be made. I just feel sad a company is worth more dead than alive, and who wouldn’t want to shoot an “outlaw” in the back to claim the reward, rather than bring him in alive? It’s just that these people aren’t “outlaws”, they are over 250,000 hard working people expecting to have a place to work in the future.

     

    "3 -Business plans and strategies working"

     

    If you call 26 quarters of decline and going into the 4th quarter holidays with same store sales down at both Sears and Kmart as “business plans and strategies working” then I can honestly say why America went into recession with that kind of thinking. If you’ve been in some of the stores lately they’re so desperate to get sales they’ve put so much on sell so close to cost just to get people to buy anything, even categories that you wouldn’t normal associate with Christmas items such as jock straps in Sporting Goods etc. LOL Sales up, but profits down is not a winning combination, if that's the plan to save the company. Of course it may make the stock go up for awhile. As far as Sears Holdings as an investment vehicle, I haven’t seen too many winners yet.

     

    "4 -Comps getting better"

     

    I admit it’s good to be optimistic, but have you ever heard the saying, “ been down so long, it looks like up to me”?

     

    "5 -The largest amount of stock purchases by funds last quarter."

     

    Not sure where you got this one, but you shouldn’t count Lambert's ESL or Berkowitz’s Fairholme as they are the only key players, and, in my opinion, working together on this one.

     

    "6 -Short interest down almost half but not enough shares to cover."

     

    Lambert's running the show, what did you expect? Even if things don't go exactly as he planned, he'll still have $billions to go home to at his $40 million estate off the coast of Florida he recently purchased.
    8 Dec 2012, 03:08 PM Reply Like
  • MSF INVESTMENTS
    , contributor
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    I rather listen to and follow Lampert and Berkowitz.
    Nothing personal.
    9 Dec 2012, 09:21 PM Reply Like
  • MSF INVESTMENTS
    , contributor
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    It's a beautiful property - I drove by it when I was in Florida.
    If things don't go as he planned he will lose billions he owns the common stock just like all shareholders, remember, his idol is Warren Buffett and his method of investing is like him.

     

    Some investors thought Buffett was wrong about Berkshire Hathaway.

     

    The squeeze is on.
    10 Dec 2012, 07:23 AM Reply Like
  • jasonrothman1
    , contributor
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    Even Buffett admitted he was wrong in investing in Berkshire Hathaway, not just other investors, but he still got rich from it anyway as he admits in this video.

     

    http://bit.ly/TS7O49

     

    Maybe Lampert could learn something from his "idol," but I admit it does sound like he's taking the same path to his riches. It's funny how myths are started, but, regardless of how, they both make money from these endeavors.
    11 Dec 2012, 12:57 AM Reply Like
  • MSF INVESTMENTS
    , contributor
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    Then buy the stock.
    12 Dec 2012, 08:34 AM Reply Like
  • jasonrothman1
    , contributor
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    I would but my morals prevent me from investing in something I feel is being manipulated as a vehicle to use for another purpose at the expense of the people working there. Plus I don't feel he's going to have the same luck Warren Buffet had in his similar situation with Berkshire Hathaway. Like I've said before I know a lot of people at both Sears and Kmart that feel Lampert hasn't done enough to save the company except to simply keep it alive to slice up into pieces later for his future investments and possible buyouts.

     

    Unfortunately, Sears has become too personal for me to put my money in when there are other companies with better track records. What Lampert doesn't understand is that a lot of these employees I know would have done almost anything for him in order to save the company, but now they are beginning to feel it would be better to sell the stores they're working in to a Home Depot, Target, or even Walmart, for example, that will probably treat and pay them better. I'm not saying he didn't expect to make it more profitable at first, or planned something different, but because of the recession, and his mismanaging of the retail side, Sears/Kmart may not be around in a few years. Who can say what he was planning, only Lampert knows that.
    13 Dec 2012, 08:58 PM Reply Like
  • NaveenB
    , contributor
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    I hope you are right, I have a bunch of stock at a cost average of 51.5, so I really hope so.
    7 Dec 2012, 02:08 PM Reply Like
  • MSF INVESTMENTS
    , contributor
    Comments (6334) | Send Message
     
    Your in a lot less than Berkowitz his average is about $60.00 a share.

     

    Many investors just look at the retail in Sears and not as a holding company. If you ask some investors and ask them about the real estate they go by what is on the books and they are not aware that they are carried on the books at GAAP prices which is a legal way to carry them on. For example, the real estate value of Manhattan is at less than $30.00 a square foot. Sears also own leases that can be converted to cash.

     

    Another point is Simon Properties carries the current market value of their real estate and their market cap is larger than Sears, however,Sears owns more real estate and they have their brands, service, retail and online retail, and they own their own Real Estate Company that handles their real estate. When you tell some investors this they never knew this, they go by just the retail business - which is getting a lot better too.
    7 Dec 2012, 05:55 PM Reply Like
  • BHL
    , contributor
    Comments (40) | Send Message
     
    Thanks for laying out the thesis on SHLD MSF, its def interesting, non consensus call. I like those.
    7 Dec 2012, 08:05 PM Reply Like
  • Micah
    , contributor
    Comments (498) | Send Message
     
    5 -The largest amount of stock purchases by funds last quarter.

     

    MSF - Where are you getting this information? I have not seen this before. Thanks
    8 Dec 2012, 05:16 AM Reply Like
  • MSF INVESTMENTS
    , contributor
    Comments (6334) | Send Message
     
    Guru Focus article.
    9 Dec 2012, 03:55 PM Reply Like
  • jmartz101
    , contributor
    Comments (187) | Send Message
     
    SHLD good conversation on this board I've been looking at putting in a small position for this stock
    15 Dec 2012, 02:31 PM Reply Like
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