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Edward Lampert Reports Owning 2 New Stocks

February 15, 2013 | About:
Holly LaFon

Holly LaFon

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Edward Lampert has a highly successful hedge fund, ESL Investments, and also often takes a hands-on role at the companies he invests in, particularly Sears Holdings (SHLD). He is a bottom-up stock picker focused on company fundamentals. Lampert’s portfolio is valued at $3.84 billion, has 11 stocks and is 94.6% weighted in the consumer cyclical sector. In the fourth quarter, he reported to holding two new stocks: Safeway Inc. (SWY) and Sears Hometown & Outlet Stores Inc. (SHOS).

Sears Hometown & Outlet Stores Inc. (SHOS)

Lampert in the fourth quarter reported to owning 9,086,583 shares of Sears Hometown & Outlet Stores Inc. (SHOS), a 7.7% stake in the company.

SHOS was spun off from Sears Holdings on Oct. 11, 2012, and its common stock began trading on the Nasdaq Capital Market on Oct. 12. Under the terms of the deal, Sears Holdings stockholders received on transferable subscription right for each shares of Sears Holdings common stock held. Each subscription right entitled holders to purchase 0.218091 of a share of SHOS common stock, with an exercise price of $15 per whole SHOS share.

Lampert announced he would exercise his subscription rights after the transaction was completed on the same day as the separation announcement. He said he would purchase all of the shares allocated to ESL investments.

Since the spinoff, SHOS shares have gained 41% to trade for $43.41 on Friday afternoon, just off their all-time high of $44.25.

SHOS has a P/E of 17.14.

Safeway Inc. (SWY)

Lampert also purchased 844,926 shares of Safeway for $17 per share on average in the fourth quarter. The new holding is his fourth smallest, at 0.4% of his portfolio. In the past five years, Safeway shares have lost 36%.

Founded in 1915, Safeway is a retail grocer with 1,678 stores across the U.S. and Canada.

In the past five years, Safeway has grown revenue per share at a rate of 6.5% and free cash flow at a rate of 30.3%. In the same time, EBITDA declined as a rate of 0.6% and book value at a rate of 5.3%.

In the third quarter, Safeway reported a year-over-year sales decline of 0.2% to $10 billion, primarily as a result of disposing of its Genuardi’s stores and a lower Canadian exchange rate. Its net income before allocation to noncontrolling interests increased to $157 million, from $130.3 million a year previously.

In January, Safeway chairman and CEO Steve Burd stepped down effective May 14, 2013. The company’s board of directors is currently in search for a successor.

Safeway has a P/E of 10.81, P/B of 1.7 and P/S of 0.1.

See Edward Lampert’s stock portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Edward Lampert.


Rating: 2.5/5 (2 votes)

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