Deric Teasley

Tuesday Morning 's Wake-Up Call: This Low Price Doesn't Lie

Great article. The question I have is, do you think that the baby has been thrown out with the bath water? I will say that I shop at Tuesday Morning and have tried to visit all of the locations within 20 miles of Washington, DC and RTP, NC where I frequently visit. The reason, they always have items at a very good price and trust me, I am not a middle age woman (although that is what seem to see in the store). If the dividend is safe (I am going to listen to the latest conference call), I think that this stock should be a buy. If you think that it may go out of business that is one thing but I think it has probably been punished enough given its current business model. Their locations are all a little off beat, so they may not be paying much for the space and given the way the full price retailers are having to give away product, they should be picking and choosing what they wish to carry. The real question is in the face of lower interest rates is, is the dividend safe from drastic reduction?

Sears Holdings: A Baby Berkshire in the Making?

I read the Message from the Chairman shareholders report for SHLD. While the bull case is compelling there were a couple of things regarding Sears liabilities that gives this more risk than one would initially want to have.
1. Credit rating. SHLD believes that it should have a better credit rating than it does. Given its cash position and net debt, it believes its cost of capital should be less. The risk is that you have to convince the credit raters that you are in a better position which is a very tough task.
2. SHLD's pension liability. There were a couple of assumptions that were in here that once again are out of the control of SHLD and relies on regulators or Congress to do the right thing with regards to pension reform. The crux of the argument has two faults, one is the belief that lower interest rates increase the liability obligation and higher interest rates lowers the obligation. I personally believe that interest rates will begin to go down before they go up. The second is that a responsible company like SHLD is having its pension insurance premiums rise due to the ineptitude of many other companies and SHLD feels that this is ripe for review so as to make pension insurance rely more on the risk of the company as opposed to the risk of everyone under defined pension arrangements. Well I think we all know that when it comes to Congress, things that should happen and things that do happen don't necessarily go hand in hand.
Like most arguments for the bull case of SHLD comes down to "Do you believe in Eddie Lampert, or not?".