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- Lands' End received its independence in April after a decade of ownership by Sears Holdings.
- Lands' End's independence gives it the freedom and resources to pursue faster growth.
- The company's improving profitability should provide a foundation for a higher market valuation.
- 3 insiders purchased Lands' End stock within one month.
- The stock was sold by no insiders in the month of intensive purchasing.
- 2 of these 3 insiders increased their holdings by more than 10%.
- Lands' End shares distributed in a spin-off to investors in April 2014 after 12 years in deep freeze as a subsidiary of Sears.
- Lands' End is currently pursuing compelling growth strategies now that it has independent access to capital and credit markets.
- After 12 years as a subsidiary of a domestic retail operation, Lands' End can now pursue international opportunities for overseas distribution in previously untapped markets such as China.
- Strong free cash flow offers the potential for shares to gain 72 percent in the next 36 months.
- Shocking 85 percent of the estimated effective free float shares are held in short positions.
- The bull case on the Lands' End spin-off seems overblown.
- Lands' End is essentially still a subsidiary of Sears, which will hurt growth and increases risk on an investment.
- 2013 earnings are unrealistic for 2014 as the company now deals with added costs to its business.
- We can try to estimate Lands' End's Q1 from the earnings just reported by Sears.
- This exercise shows that Lands' End is for the most part stagnated.
- However, conducting the exercise shows other factors which mean Lands' End will likely be an interesting investment.
- Lands' End recently spun off from Sears Holdings.
- Lands' End paid a $500m dividend to SHLD prior to the spin-off. This, among other factors, will handicap the company going forward.
- CEO Eddie Lampert still controls Lands' End and has a less than promising retail track record.
- Many nautical terms and metaphors such as "anchors" apply to this spin-off.
- Lands' End's recent listing and subsequent price drop seem to indicate a classical spin-off special situation that should generate excess profits for investors.
- The company's online/catalog business produces stable FCF yield of 13% on current market cap. Increase in debt load will not affect results materially.
- Relative to peers, Lands' End appears to have a potential upside of 60%-90%.
- Catalysts include reduction in after spin-off selling, potential reinstatement of dividends and increased awareness of the company among investors.