IT HAS BEEN A TOUGH YEAR for Sears Holdings, created by the 2005 merger of retailers Sears Roebuck and Kmart. After peaking in April at more than 195 a share, the company's stock (ticker: SHLD) sank like a stone to a low of 123.39 in September. It now treads water around 134.
Yet Sears is not without glamor, despite its poor stock-market performance and prosaic product lines like Kenmore appliances and Craftsman tools. In part, that's because it is run by Edward Lampert, a money-management wunderkind who cobbled together the merger and whose hedge fund, ESL Investments, owns about 45% of Sears' 150 million shares outstanding.
In the fund's 19 years of operation, Lampert's limited partners have enjoyed average annual returns of about 25% after fees from the concentrated bets the 45-year-old investor has made. In late 2004, BusinessWeek went so far as to dub Lampert the next Warren Buffett for his prodigious investment accomplishments, though, unlike Buffett, Lampert is willing to parachute into dicey corporate situations -- like that of once-bankrupt Kmart, which he bought in 2002 -- and actually manage the companies.
Lampert has applied his turnaround strategy, consisting of cost-cutting and an obsessive focus on profit margins, to great effect at AutoZone (AZO), his second-largest position. But he has had little luck, so far, with Sears.
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Yet Sears is not without glamor, despite its poor stock-market performance and prosaic product lines like Kenmore appliances and Craftsman tools. In part, that's because it is run by Edward Lampert, a money-management wunderkind who cobbled together the merger and whose hedge fund, ESL Investments, owns about 45% of Sears' 150 million shares outstanding.
In the fund's 19 years of operation, Lampert's limited partners have enjoyed average annual returns of about 25% after fees from the concentrated bets the 45-year-old investor has made. In late 2004, BusinessWeek went so far as to dub Lampert the next Warren Buffett for his prodigious investment accomplishments, though, unlike Buffett, Lampert is willing to parachute into dicey corporate situations -- like that of once-bankrupt Kmart, which he bought in 2002 -- and actually manage the companies.
Lampert has applied his turnaround strategy, consisting of cost-cutting and an obsessive focus on profit margins, to great effect at AutoZone (AZO), his second-largest position. But he has had little luck, so far, with Sears.
Read the complete article
