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Eddie Lampert Slashes Stakes in Four Stocks
Posted by: Holly LaFon (IP Logged)
Date: May 25, 2012 04:32PM
Eddie Lampert, founder of ESL Investments which has $19.5 billion in assets under management, made big cuts to holdings of CIT Group (CIT), Seagate Tech (STX), Big Lots Inc. (BIG) and Istar Financial Inc. (SFI) in the first quarter. Previously, the holdings where his sixth, seventh, eighth and tenth largest, respectively, in his portfolio which now contains eleven stocks. He bought no new stocks in the first quarter.
CIT Group (CIT)
Lampert decreased his stake in CIT Group, a bank holding company, by 87.12%, selling 4,473,230 shares at an average price of $40 per share. At the end of the quarter, he had just 661,495 shares of his CIT Group stake left.
CIT shares begin to appear in Lampert’s SEC filings in the first quarter of 2008, at the time that he began to bet on a housing recovery by adding shares of home builders like Centex Corp and KB Home (KBH) along with mortgage lenders like CIT. He initially bought 3,925,000 shares of CIT at an average price of $11.85.
In the fourth quarter of 2008, he more than doubled his stake in CIT Group and owned 15.4 million shares by year-end. In the fourth quarter of 2009, his stake fell to 4,527,973 shares, but it is unclear how much of his share holding fluctuations during this period were a result of CIT’s bankruptcy reorganization plan effective Dec. 10, 2009. The plan cancelled and extinguished all outstanding common and preferred stock and issued new stock to eligible debt holders.
In the second quarter of 2010, he sold 965,264 shares of CIT at an average price of $38, to end the quarter with 3,562,709. The price went up temporarily over the years and he purchased more shares in 2011, but ultimately the price has gone up only about 8% since 2011, with the bank reporting losses in three of the four previous quarters.
Seagate Tech (STX)
Seagate is the global leader in hard disk drives and storage solutions which Eddie Lampert invested in the fourth quarter 2010. He bought 3,848,484 shares at an average price of $14, and added 4,105,519 more the next quarter at an average price of $14. He cut his stake in the company by 85.37% in the fourth quarter, selling 5,956,151 shares at a large profit of $25 per share.
Most of Lampert’s gain came in the first quarter of this year, when the stock soared more than 64%.
On January 31, Seagate’s stock jumped when it revised its earnings and revenue estimates to be in line with analysts’ estimates. The company has increased its earnings for the last four quarters and increased net margins each quarter from 3.5% in the first quarter of 2011 to 25.8% in the first quarter of 2012. The company also purchased Samsung’s hard disk drive assets on Dec. 19, 2011.
Big Lots Inc. (BIG)
Lampert cut his stake in Big Lots Inc., an off-priced retailer, to 545,772 shares in the first quarter of 2012 at an average price of $43, from 1,653,122 shares the previous quarter. Lampert initiated his stake in Big Lots in the first quarter of 2011 and paid on average $36.35 per share for his stake in the company.
In 2011, Big Lots gained almost 24 percent, and gained another 14% in the first quarter. Lampert sold just in time because the stock dropped about $10 on April 23. That day, the company announced new first quarter sales guidance of slightly negative U.S. comparable store sales, instead of the 2 percent to 4 percent increase it previously expected. It expected sales at its recently acquired Canadian operations, however, to be slightly above their guidance. First quarter results showed that comparable stores sales for U.S. stores decreased 0.8% for the quarter.
Istar Financial Inc. (SFI)
Lampert cut his stake in iStar Financial by 46.22 percent at an average price of $7 to end the quarter with 1,449,421, after initiating the stake with 1,916,826 shares in the third quarter of 2011 at an average price of $7, and adding 778,088 in the fourth quarter at an average of $6.
Again, Lampert sold a stock that increased greatly in the first quarter – 37 percent – and dropped shortly there after – 21 percent from the end of the quarter to date.
iStar, a fully-integrated finance and investment company focused on the commercial real estate industry, reported a net loss of $54.8 million for the quarter ended March 31, 2012, compared to $67.4 million the prior year, which drove down its stock. The decrease was primarily due to lower gains from an early extinguishment of $1.7 million of debt.
See Eddie Lampert’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Edward Lampert.
Guru Discussed: Edward Lampert: Current Portfolio, Stock Picks
Stocks Discussed: CIT, STX, BIG, SFI,