.

He's not a competent CEO. Will his board replace him? Will his pay be cut? Will any of the things that would happen to me if I cost someone $20B happen to him?

Obvious conclusion: The American system for corporate governance needs a complete overhaul. Boards are not doing their jobs.

Not commenting on anything else in the article necessarily, but why not compare with Macy's or JC Penneys who are both down comparable 80% over past two years. I am NOT saying that is a good return, or a retail department store is a better place to be than a big box retailer, just unsure how much of the decline is attributable to economic and industry declines versus poor management decisions. I understand that a certain amount of framing is editorially necessary though.

I miss the gold old days when guys like our Dad's had a passion for retail and not a passion for their ego.

The exact line I used to comment on his letter posted on another site. He blames everyone but himself. I remember my dad taking me shopping at Sears for the first time over 40 years ago. I continued the tradition by taking my children there. For over 40 years we bought our clothes, tools, sporting goods, electronics, appliances, and lawnmowers there. No more. Mr. Lampert should be ashamed of what he has done to one of the finest institutions in America.

When he is done destroying Sears, perhaps Wacky Patty will hire him at Overstock.com. He can drive a stake through the heart of that company as well.

He does not get paid to be CEO.

customers vote with there feet and I for one have long since voted NOT to go to Kmart.

Even Sears is going down fast

yep others are being hit hard, however Jeff put it in simple terms

If your store looks dirty, it tells prospective customers it doesn't care about its merchandise or the customers.

Jefferey,

Please describe in detail how Mr. Lampert took 5 billion out of Sears and put it into his Hedge Fund.

That in my opinion is a wildly false accusation, though I am open to new information.

He did raise money for a 5 billion fund last winter.

According to SEC filings, ESL's stake has increased modestly since the merger, and Mr. Lampert's personal pecuniary interest in SHLD increased substantially last summer, when he took his fees in SHLD Stock.

I appreciate your perspective, however it is absolutely irrelevant to my point.

for what it's worth, actually had me fighting back tears. (how bout dem Bears)
The anesthetization of shareholders has gone on far too long.
This pervasive attitude from corporate governance, in so many ways
needs to be brought to account.
I sure feel content knowing some took contemporary opportunity
at the expense of the unassuming many and above all, yet defend it.

I just wish others had either the the dad or brass that gave you
the DNA to speak so honestly to well heeled influence.
This has needed a voice and a medium that doesn't get dismissed or marginalized so the message may clearly be conveyed and understood. Props.

Especially if your goal is spreading misinformation.

Eddie Lampert is an excellent capital allocator who has done more for the shareholders of Sears Holdings in the last three years than perhaps any other company in the United States.

He has spent 5 Billion buying shares, (he has repurchased 25% of the company) and two billion paying off debt including pension obligations since 2006.

The fact that the market values a company like that at less than five Billion dollars is laughable, and partially based on the fact that the float of about fifty million shares is sold short to the tune of 17 million shares, creating a false float of almost 40%.

Imagine what would happen to the market for hamburger at your local grocery store if someone was in the parking lot selling 40% as much as the store sold at whatever price people would pay before they went in (never mind that it was made of mixed dog and cat meat.)

Find me another five billion dollar company that has over 40 billion in sales, and annual free cash flow of 800 million dollars in the middle of the worst recession in seventy years,

That company also should have spent seven billion on increasing its shareholder value in the last four years.

You might be right that Eddie hasn't taken responsibility for his failings, he also hasn't told the world what a fabulous job he has done with a weak hand.

Let me give you three figures that add up in an interesting way.

1. 10 billion in cash and inventory at cost (valued at the lower of either cost or market)
2. 5.8 billion in merchandise payables and long term debt
3. 4.8 billion in market value

I understand that you are a trader, and thus threatened by Eddie's complaining about unfettered short selling and Bear raids.
I also wish you and everyone you know the best of luck in closing out your SHLD short positions profitably.

Let's remember, Mr. Lampert is NOT the CEO of Sears folks. He is the Chairman (let's at least get the information correct). He's a savvy investor in seriosuly declining economic times.

Jeff,

You nailed it...Eddie is the modern day Robin Hood except he's robbing from the poor and giving to the rich! He'll keep plodding along on the backs of the associates until he finally drives SHC into the ground.

Savvy investor...are you kidding me???? Do you know how much Citi stock he bought at 50? Do you know how many stock repurchases of SHLD at 180? You must be kidding or you must be related to him...

every decision is made by??? hmmm

It would appear that Eddie Lampert is a)the patron saint of capitalism or b) a Chairman or CEO who has a corporate sized ego, and just enough smarts and lack of scruples to get every last ounce out of a dying cow. I'm sure the truth is somewhere in between, all though I'd hazard a guess that his true nature is somewhat closer to b than to a. The "modern" CEO isn't so gauche as to actually care about the company he or she is running.

From personal experience in working for the company when for the past decade and witnessing the disection and travesty of Lamperts empire, I can tell you his recent press release is a bunch of wishful thinking. The stores have not only been cash starved ,they have a turnover rate higher than I have ever seen in 20 years of retail. Retail is a people business and Lampert is running it as an investment. He has no retail experience. His inflated ego and his abstract ideas of how to come up with some winning plan are both in need of a reality check. I do not shop either chain in his "holding" company. Not only are the prices non competitive but the service is gone. Walking into a big box with one cashier, now that is thinking about the customer.I do feel for the people who still work for them. They have had their wages frozen. The hours have been drastically cut to the bone and yet the company wants 24/7 dedication and availability. The people who do try to run the stores were living paycheck to paycheck while Eddie had his face plastered on a magazine in 2008 with an income for himself of 800 million for 2007 alone. i think he is a crook.

None of the CEOs you named has had big a hand in the purchase of their chains as Lampert. Nor did they write 20 page reports on what's wrong with everything but themselves.

A few folks mentioned this. If you think Eddie doesn't keep a firm grip on SHLD in terms of the decrepit stores you see you are apologizing for a billionaire.

He can strip mine the locations for all I care. He's just can't expect me to take him seriously when he tells me how to fix the world when he can't fix a chain he compares to 3 bankrupt chains which don't add up to the size of SHLD together.

His stock is the worst of the big box retailers for the last 2 years, the stores are garbage dumps and he hasn't lost much, if anything. You take exception with what I'm saying?

Go read his 20 pages of self-pity and let me know if you feel the same way.

Again, I couldn't care less how he feels about the actual chains. His job is to care about shareholders and he obviously doesn't.

Disagree? Find one quote in those 20 pages of any substance suggesting otherwise.

If I was short, I would say so. I couldn't feel less threatened in any way by Eddie's opperations and find the notion fairly laughable. It's not my note celebrating Mr. Lamperts recent performance.

Find me a top 5 retailer with worse stock performance than SHLD since he liquidated at $5b. SHLD was a bubble stock. *Pop

I'm not saying he's not smart or a criminal. I'm saying, and repeating, that he's a failure as a merchant. It's a sign of respect for him that the shares haven't fallen further. The folks who made a fortune have a choice: They can book gains or see if Mr. Lampert can make it work.

I have no money on it but I'll bet you a dinner the stock is in the single digits before it doubles. Buying back shares and maintaining stores are very different things. Finance guys have died in retail for generations. Nothing new under the sun... unless Eddie can pull this out of the fire.

I personally wish him luck.

And not to come back on this twice but, yes, in fact he has told folks what a great job his done with a weak hand. Remember page one of his 20 page note, listing the three retailers a fraction of SHLD's size which have gone bankrupt?

I'm not sure what you think that was but braggadocio comes in many forms. Me? I'm taller than both my kids... COMBINED! And much more wealthy!

jeff,
you said,
"Find me a top 5 retailer with worse stock performance than SHLD since he liquidated at $5b. SHLD was a bubble stock. *Pop"

please describe this five billion liquidation and how you know of it, or admit before the minyan that you are a liar. What exactly was liquidated, and when?

Jeff, if you aren't short, you are either stupid or pimped out out by a short seller. Maybe your short seller buys your $5B fake rubber knee pads at kmart, and employs you to spend your time putting in a special order for knee pads with the teenagers at your local kmart after volleyball season is over.

I'll take your dinner bet if you give it a five year time frame. If SHLD hits single digits before it doubles, you can take me out to mcdonalds and I'll laugh at you, otherwise, you take me out to the four seasons and I laugh at you. Actually, I'm laughing at you now.
Even a liquidation scenario has SHLD shareholders holding $120 in cash at the end.

Lampert through Sears can borrow half the 2B Market Value that ESL does not own through his credit revolver.

One billion in credit equals thirty million shares at forty dollars, 60% of the float on the stock.

Your unsubstantiated facts in your "article" border on slander, If you can do third grade math, please illustrate how Lampert took 5 billion out of the company to put it in his hedge fund, otherwise, have fun with the special order kneepads from Kmart.

LOL - I'm pretty sure I agreed with you.

Caring about the shareholders requires creating long term value and profits for shareholders which means caring about the actual company in question. I haven't yet read of a high profile CEO (or Chairman) who seemed to care for anything but the value of his or her stock opinions and their egos. Only high profile CEOs who start companies appear to be the exception to the rule.

My reaction was mainly to the rather long missives that appear to have a huge emotional investment in Mr. Lambert being "good". He obviously stirs up a lot of emotions which I'm going to guess that he doesn't actually deserve.

Sam,

I will say what I said on another board. There is no dollar amount you can ascribe to a liquidation of SHLD. This is the same argument people used with both MBI and ABK last year. People like you said, "..but if they just liquidated, the shareholders would be left with X dollars a share". People like you kept saying that when the stock was $80, then $50, then $20, and finally at $5.

Those two stocks are relevant because SHLD is trading almost exactly like them. It seems it has found a footing around $40. How long with that last?

Finally, it doesn't matter what YOU think a share of SHLD will be worth even if it liquidates. You don't buy a stock hoping the company will liquidate the assets. You buy it because you think it will either grow in price, or pay you a dividend, or both.

Why would anyone own SHLD when it is clear that they are not investing in the company to grow it (quite the opposite actually) and it never pays any dividend? The only reason to buy this stock is to hope shorts start to cover so the stock comes back up. Unfortunately, I agree with Jeff, this company is killing itself slowly.

And finally, you are not being nice to Jeff, suggesting he has ulterior motives as if he is short or has friends that are short. What about you? Are you defending this stock because you are long?

I own June puts on SHLD.

James

He's not the CEO. He's the Chairman. He hires, then fires, CEOs.

Think of him as George Steinbrenner only w/out the wins.

Sam C,

If you're looking for any substantive response you should refrain from calling me things like a "liar", "stupid" etc.

Or simply let it go, take two steps back from whatever position you have in the stock or company and see it for what it is.' Do your own homework on the $5b. I'm here to provoke thought; not take insults from anonymous e mailers.

Personal attacks bore me in general. Stop shooting at the messenger and look at the company for yourself. I don't lie and if you're looking for an apology you're barking up the wrong tree.

Ah, I see. And Target and Wal-Mart CEOs (or Chairmen...) did write 20 page letters so that's why the comparison was made? Again, I'm not suggesting Mr. Lampert has done a good job, nor am I implying by that he has done a poor job. Neither am I saying I don't see your perspective in seeing fault that he has written such a letter. I'm just saying if we're talking about return, lets compare apples to apples, or at least recognize apples are out there that performed very similarly.

You're a tough guy, Jeff. As you know, telling the truth is going to p&*s some folks off sometimes. Keep it coming, that's what make Minyanville work.

WMT was up last year and for the period I outlined. If they want to modify Sam's "Big Bad Wolf" series into an annual report, they can knock themselves out as they've earned the right.

Target modestly outperformed Sears but still has much explaining to do.

If either company provides a syllabus I'll take exception to that as being inappropriate as well.

My note was rather straightforward by my standard. I think men who run (under whatever title) the third largest general merchant in the country have a duty to shareholders to explain their failings and goals.

Eddie's success has certainly earned him the right to express an opinion in any number of forums. He chose to distribute the note to shareholders who have lost more than 2/3's of their investment in just over a year. That's either tone deaf or insulting; depending on where you sit (some of you seem to find it heroic... there we disagree).

With that I'm done debating this point. Sam C, I wouldn't hold your breath waiting for an apology but I will do you the favor of noting that, as a trader, Eddie's leading a buyback of shares of SHLD in the 100's is neither "threatening" nor "impressive" to me. It might make me feel sort of sorry for him, had he not chosen page one of his report to boast about SHLD outperforming Linens N' Things.

We can argue about something else next week.


Jeff

Jeff,

I will take your diner bet on sears going to single digits before it doubles.

In addition, I would honestly like to know where you got the 5 billion number-I did my homework, and can only find an option exercise that was done by Third Avenue. I don't see in ANY SEC filings where Eddie sold shares or anything.

No one ever marks their home to market. They live in it.

Good borrower has paid his monthly payments on time. He has good FICA scores

He wants to refinance at today's lower interest rates.

He would have a lower monthly payment. Thus, there is less risk of his not paying the loan. From a lender's point of view this is a stronger loan. Period. End of discussion. Borrower likes his home. Borrower wants to stay there. The perfect candidate for a bank.

The bank regulations won't let him refinance because experts say the value of his house has gone down—marked to the market.

SOLUTION: The regulations have to permit ANY borrower who has a good payment history—conforming, non-conforming, Alt-A, Subprime—to refinance. Regardless of the so-called “mark to market value” of the home. Tell the valuation experts to go sweep the streets.

Jeffrey,

Would you please come out with the info on where Lampert cashed out to the tune of $5 billion? I again state that I don't understand where the number comes from, and simply want to know (as do some other readers) so that we can see if your analysis is right or not.

Jeff,

Why did you change substantive parts of the article?

Mr. Macke,

You do great work and it is truly appreciated by myself, and others. Unfortunately I can not find the $5 Billion number you are referencing, unless you're talking about stock buybacks. Can you please show us where you found your $5 Billion figure.

Thanks much,

BT

If the goal is to "Provoke Thought" this column both over and undershot the goal.

Truthfully, being accused of writing things I simply never said, and the general (willful?) avoiding of the point of the column ("Eddie has no business lecturing the Street after his latest run") wasn't the finest moment for me or many of the readers.

What's more, if you're going to call me names, and you obviously are, you can do better. Aspire, people. Dare to be great.

To that point, the number of new "Pals" I have commenting, and their uncharacteristic (to Minyans) vitriolic tone has me more than suspicious about their general motivations.

Regardless, the below is the last thing I'll say about the $5 billion beyond:

1. The information was, and remains, quite easy to find online

2. I never, ever, accused Eddie Lampert of stealing.

3. I didn't change a word of the article myself. It was edited for reasons I both agree with (while he runs the company, Mr. Lampert is the Chairman, not CEO, of SHLD) and reasons I don't (most everything else).


From where I sit, the matter is now closed. Not to worry, I'll offend you on some other matter soon...



Re: $5 Billion Removed From Article
    
Today, 12:48 pm

I am/ was/ regret ever mentioning was Mr. Lampert doing a rare (in every possible sense) fund raise/

I've Googled this several dozen times to make certain I wasn't insane. In fact, as part of EVERY column I write, I checked the facts ahead of time. I'll cite David Faber's report as a final word of the facts. And, just to try to stay a half step ahead of the endless accusations, I'm citing David not because he's my pal; we work in different places, doing different things entirely and thus seldom cross paths:

"CNBC's Faber: Lampert Plans to Raise Billions for ESL Fund
Topics:Hedge Funds
Companies:Sears Holdings Corp | Goldman Sachs Group Inc
By: David Faber | 11 Jun 2007 | 12:00 PM ET


Eddie Lampert, the billionaire hedge fund manger and controlling shareholder of Sears Holdings, is embarking on an effort to raise billions in new money for his widely successful hedge fund, ESL, according to people familiar with the situation.

Edward Lampert
AP
Eddie Lampert plans to raise billions in new money for his widely successful hedge fund.

ESL is already a giant, with assets in excess of $18 billion. But Lampert has rarely raised new money. Almost all the assets in the fund are the result of compounding, given his 19 year old fund has delivered annual returns, net of fees, that approach 30%. And the fund's largest position, a 40% stake in Sears Holding, is not exactly liquid.

Rather than raise money by pursuing his own marketing strategy, Lampert has enlisted Goldman Sachs to raise him what is expected to be between $3 and $5 billion. Goldman will essentially be doing a private placement of limited partnership units in ESL. The minimum investment is $25 million.

And the money will carry a five year lock up with six months notice due to withdraw or else you're in for another five years. Lampert has traditionally had long lock-ups given his style of investing is to take large positions and hold them for many years."


Now, raising $5billion isn't falling out of bed, even for Mr. Lampert. I never, EVER, said he stole the money. I said he took an illiquid holding, converted it (his "track record is inseparable from the returns of SHLD) and raised $5b with which he could do whatever he wished.

Which is what the "effective" in "effectively cashed out" meant. I believe I said January. It was June. Either way, SHLD was down over 40% between the raise and the end of the year.

I never used the wold "stole" which keeps coming up in various forms in these unbiased questions. Neither did I say it was "wrong" for Eddie to make money. I saId he "effectively cashed out". What did that mean? It meant he had a track record based on a GREAT but wildly focused investment SHLD. He couldn't sell those shares without impacting the market. He *could* use his paper returns to raise real money, if he had the right connections. He did.

You're here to learn? Learn this: Rich guys generally get rich because they focus on that which benefits rich guys. Did he "steal" (whatever tense or spin you and others choose to put on my words)? No. Was he unethical? No, not unless he knew his stock was weeks from plummeting and I doubt he did.

Did he grow his fund, reduce it's holding in a major investment and do so on terms that very few get then regress to the mean in very short order in terms of ROI? Yes. Yes he did.

He "effectively cashed out (a large portion of his SHLD)". Which is what I said. ESL was absurdly illiquid. The fund raise made him both richer and liquid, especially with a 5 year lock-up.


None of which was the point of the freaking article. The point is/ was and remains that a guy running the 3rd largest retailer in the world is, in my opinion (which is what we commentator types offer) not the ideal guy to spend 1/2 his letter to shareholders griping about regulations.


So, when you come right down to it, I'm not much sheepish about anything other than the poor phrasing of the column which led to a slew of obviously self-serving accusations of what I wrote, what I retracted, refusal to admit I was wrong and "borderline slander".

Not that you were engaging in any of the above; just that the net effect of the snowball on me was roughly the same. Hope this ends the matter and answers your question.

    
On March 9th at 05:48 PM
    
BT Shine wrote:
    
Mr. Macke,

In your Sears article you quotes a $5 Billion dollar number that Lampert stole from SHLD investors. Are you referencing the stock buyback over the past few years? If so, are you saying that Lampert sold his stake in Sears Holdings via the buyback?

I am confused as to what you're saying. Can you elaborate?

Best Regards,

Thanks for (finally) answering what you were talking about in the unedited article Jeff.
I think coming clean on that from the outset might have helped your credibility in some circles.

the changes from the original text are here,
Deletion #4 is especially poignant with respect to the deceptive nature of your original text, intended or not.

he did not plow money out of sears and into his hedge fund, he raised money from wealthy investors when he realized sears wasn't going to make him much more money, fair enough, and you are entitled to your opinion that that act was amoral, rather than just acting in his self interest.

The 'Edits':

#1) CHANGE of "CEO" to "Chairman" in reference to Eddie Lampert's role at SHLD.

#2) DELETION of "This is from a man who effectively cashed out to the tune of $5 billion dollars in January of 2007 with SHLD in the high 170s."

#3) DELETION of "For comparison's sake, in the time since Eddie's cash out (he put the money in his hedge fund),"

#4) DELETION of "A man who used his old firm, Goldman Sachs (GS) to plow $5 billion out of Sears and into his personal hedge fund isn't shameless. It's utterly amoral. Mr. Lampert calls himself a "victim" in the document. The mind boggles at a man who would write such a thing to an audience of Sears holders."



Sorry if my name calling didn't match your visions of greatness. I thought It was fairly funny.

For the record, as long as we're getting into semantics, I never called you a liar or stupid, I suggested that you either tell us how eddie took money out of sears, and put it into his hedge fund, or admit that you were a liar.
thank you for telling us that eddie did not take money out of sears, he raised money for his hedge fund from outside investors.

I also never said you were stupid, I said that you were either short, stupid, or pimped out by a short seller. Perhaps I should have also put forth the option that you were "accidentally inarticulate and deceptive." I'm still not sure any of those four have been ruled out.

for the record, I also said these things to get a rise out of you (which worked) after you did not reply to the questions put forth politely at first by myself and others, which I originally asked very courteously on the minyanville comment board and by private, signed email with absolutely no response.

When the fruit doesn't fall from the tree on first shake, I shake harder.
Especially about information on a stock holding of mine.
I don't take much fancy to being called an anonymous emailer either, I used my real email address to log on to this site, and I originally emailed you from my real email address, with a signature.

Best of luck with making the Fast Money.

My God, you're like... like... an evil genius. Or just a child.

We can talk about all that childish evil genius stuff and the name calling when you buy me and J M dinner.

We can chat again at $74. (that's less than book value after the 4 billion equity decreasing buyback and all the bankruptcy related asset write-downs)

Let's go to your favorite restaurant in the bay area, that would be convenient for me.

Sam/Jeffrey,

Lest we forget that Fast Money is shot in the middle of Times Square; I would be happy with eating at the Heartland Brewery (a stone's throw away)... After all, I should be in Manhattan for the WEST meeting-after all, I'd say that SHLD stands a good chance of getting to $74 by mid July.

J M, you were off by about a half a month.

I'm not sure when I can make it to Manhattan, certainly around the winter holidays.

SHLD hit 74 dollars today, a clean double before hitting single digits.

Heartland Brewery sounds excellent, and I'll buy a round of beers.

It is funny, the WEST shareholder's meeting is actually taking place next Thursday (Aug 13) and I bought my plane ticket last night... but yeah, I want that dinner.