Passerby37

Sears Holdings' True Value

Geez -

The gallery sure hates this one.

Buffett bought Berkshire, not because it was a great business - it was lousy - but for the cash flows. He then took the returns from the textile mill and reinvested them in growing enterprises with high Returns on Capital which eventually created the mountain of money that is Berkshire is today. Note: the original mill did eventually go under in the early '80s.

I'm impressed with Lambert because he has managed to gain control of not one but two large cash generators(Sears and Kmart) and... their undervalued land holdings to boot. Sweet move. Now, these two entities will probably never develop the 'moats' that their competition have and grow effectively, but they don't need to. They are already providing, IMHO, what Lambert intends: Cash Flows. He runs tight operations not with the intention reinvesting profits for growth, but to maintain position.

His challenge, as I see it: Can he find places to put this loot to work in new places for a better return - a la Buffett?

Nice work Rich.