fcharlie

Eddie Lampert Has a Conflict of Fiduciary Interest

You say that Lampert's desire to milk the retail ops. for every bit of cash flow is the cause of his problems. This was the intent the whole time. Just because the economy is suffering and the stock is down big doesn't make this a bad idea. The fact is that even if you starve Sears and K Mart of capital the way that he's been doing, it still will take a decade to wind them down. All Lampert needs to do is complete this new buyback and most of the float will be locked up. It's a pure arbitrage play now. Selling inventory to buy back stock at less than 50% of book value seems like the right idea to me. What prudent retailer facing negative 10% comps wouldn't be reducing inventory by 10%? After this stock buyback is complete they can go out and buy back a huge chunk of their debt for 50 cents on the dollar. All the retail operations have to do is live to see another up cycle and Lampert and Berkowitz are going to come out golden.